DEE auditors flag uncertainty over Rs 50.6334 crore assets

DEE Development Engineers Limited’s auditors said on November 14, 2026 that they could not determine whether Rs 50.6334 crore of assets at subsidiary Malwa Power Private Limited required impairment as at September 30, 2026, because its power-purchase agreement had expired and tariff proceedings remained unresolved before the Appellate Tribunal for Electricity.

What did DEE’s auditors flag about Malwa Power assets?

DEE’s auditors flagged uncertainty over whether Malwa Power’s Rs 50.6334 crore asset carrying value requires impairment and over any consequential impact on consolidated results. The subsidiary’s 20-year power-purchase agreement, or PPA, with Punjab State Power Corporation Limited expired on April 27, 2025, and management had not performed an impairment assessment by September 30, 2026.

The auditor said it lacked sufficient appropriate audit evidence on the carrying value, so it could not determine whether impairment was required. This was a limited review under Standard on Review Engagements 2410, rather than a full audit opinion. Subject to the possible effects of this observation, the auditor said nothing else had come to its attention to suggest the consolidated results failed to meet applicable reporting requirements.

DEE said the tariff determination and continuing proceedings had adversely affected Malwa Power’s operational viability and created uncertainty over future cash flows. Management said it could not assess the resulting effect on the Rs 50.6334 crore carrying value pending the final appeal outcome and its evaluation of strategic alternatives. The filing therefore records neither an impairment charge nor a conclusion that the assets are recoverable.

The Rs 50.6334 crore balance is a substantial part of the Rs 79.1556 crore in consolidated power-division assets at September 30, 2026, although DEE does not state that the full segment balance belongs to Malwa Power. Total power-division assets fell by Rs 13.5897 crore from March 31, 2026, while segment liabilities declined by Rs 7.6843 crore.

What tariff applies to Malwa Power after its PPA expired?

Malwa Power’s tariff changed from Rs 8.59 per kilowatt-hour, or kWh, under its previous PPA to a provisional Rs 3.50 per kWh after expiry, before Punjab State Electricity Regulatory Commission set Rs 5.224 per kWh for the extended period on March 27, 2026. That final tariff remains subject to the appeal pending before the Appellate Tribunal for Electricity, or APTEL.

The subsidiary operates a 6 megawatt biomass plant in Punjab. Its PPA allowed a possible 10-year extension by mutual consent, but Punjab State Power Corporation Limited offered Rs 3.50 per kWh after the contract expired. Malwa Power then petitioned Punjab State Electricity Regulatory Commission, or PSERC, seeking continuation at the former Rs 8.59 per kWh rate.

PSERC’s interim order of April 24, 2025 allowed operations at Rs 3.50 per kWh pending final determination. In its September 18, 2025 order, PSERC said tariff determination was a statutory function and asked both parties for detailed proposals. Punjab State Power Corporation Limited challenged that decision, and APTEL ordered on December 8, 2025 that the interim tariff would continue pending the final outcome.

PSERC’s March 27, 2026 order set the extended-period tariff at Rs 5.224 per kWh, with 5% annual escalation on the variable component. DEE filed a rejoinder at APTEL on June 21, 2026, seeking replacement of the Rs 3.50 per kWh interim rate with PSERC’s final tariff. The filing gives no hearing date, decision timetable or separate financial forecast for Malwa Power.

What is DEE’s separate Abohar biomass tariff case?

DEE is separately contesting a retrospective tariff revision at its 8 megawatt Abohar biomass plant, where PSERC’s August 20, 2025 order set a Rs 5.88 per unit tariff and reduced the stated excess-revenue payable to Rs 13.8496 crore. This matter concerns DEE’s own PPA, which runs until December 31, 2040, rather than Malwa Power’s expired agreement.

DEE had sought an increase from Rs 7.48 per unit after completing 13 years of the 30-year PPA, citing increased costs. PSERC instead reduced the tariff to Rs 5.26 per unit retrospectively from January 1, 2024 in its May 15, 2025 order, producing a stated Rs 16.8287 crore payable for excess revenue billed. The August review order lifted the tariff to Rs 5.88 per unit and capped recovery at 50% of monthly bills.

Punjab State Power Corporation Limited appealed the August 2025 PSERC order before APTEL. DEE separately filed a writ petition with the Punjab and Haryana High Court challenging the tariff methodology and seeking a cost-plus basis under Section 62. The High Court stayed the PSERC order through an interim order dated September 23, 2025.

DEE made no adjustment in standalone results for billed excess revenue because the matters are sub judice and the PSERC orders are stayed. Management, citing its assessment and legal opinion, said it believes there is a strong likelihood of success. The auditor treated the Abohar litigation as an emphasis of matter and did not modify its limited-review conclusion on that issue.

How did DEE’s power division perform during the disputes?

DEE’s consolidated power division reported revenue of Rs 23.0033 crore and a loss before interest and tax of Rs 2.7098 crore for the half year ended September 30, 2026. Revenue was lower than Rs 25.4334 crore in the half year ended September 30, 2025, while the loss widened from Rs 2.5787 crore.

For the September 2026 quarter, power-division revenue was Rs 4.6357 crore, compared with Rs 18.3676 crore in the June 2026 quarter and Rs 10.9725 crore in the September 2025 quarter. Its quarterly loss before interest and tax was Rs 1.5012 crore, against losses of Rs 1.2086 crore in the preceding quarter and Rs 1.3664 crore a year earlier.

DEE does not disclose Malwa Power’s individual revenue, loss or cash flow. The segment data therefore cannot isolate the expired-PPA subsidiary’s financial contribution. They do show that the power division remained loss-making in both half-year comparison periods as the tariff matters continued.

At group level, DEE’s consolidated revenue from operations rose to Rs 587.449 crore in the half year ended September 30, 2026 from Rs 493.7582 crore a year earlier. Consolidated profit after tax increased to Rs 39.536 crore from Rs 30.9378 crore, while the piping division reported Rs 535.8083 crore of half-year segment revenue, compared with Rs 23.0033 crore for power.

Conclusion

DEE’s disclosure identifies two separate Punjab biomass-power issues. Malwa Power’s expired PPA and unresolved tariff appeal have created uncertainty over Rs 50.6334 crore of assets, with auditors unable to determine whether impairment is needed. The Abohar case concerns a stayed regulatory order and a disputed Rs 13.8496 crore excess-revenue payable.

The next disclosed developments to watch are APTEL’s final outcome in the Malwa Power appeal, DEE’s June 21, 2026 request to apply PSERC’s Rs 5.224 per kWh tariff, and management’s evaluation of strategic alternatives. In the Abohar case, the High Court stay and APTEL proceedings remain relevant to whether any revenue adjustment is ultimately recorded.