Dharani Sugars auditor flags Rs 96.90 crore as payable

Dharani Sugars and Chemicals Limited should have classified Rs 96.90 crore of borrowings as current liabilities at September 30, 2026 after cancellation of its restructuring arrangement, its statutory auditor said. India Debt Resolution Company Limited separately estimated Rs 59.2 crore of overdue obligations and reserved rights to pursue recovery and insolvency proceedings.

Why did Dharani Sugars’ restructuring arrangement end?

Dharani Sugars’ restructuring ended because it did not cure repayment and financial-covenant breaches within the period granted by the lender. The company entered the Master Restructuring Agreement on May 24, 2024 with India Debt Resolution Company Limited (IDRCL), acting as trustee for National Asset Reconstruction Company Limited (NARCL), after withdrawal of the corporate insolvency resolution process.

The auditor identified missed instalments, unfulfilled security-related conditions, failure to create a Debt Service Reserve Account, delayed monitoring arrangements, unpaid farmer dues and additional borrowings without lender approval. IDRCL’s legal counsel issued a default notice on February 7, 2026, allowing Dharani Sugars one month to cure the defaults, but the company did not do so and the arrangement’s concessions and reliefs were withdrawn.

IDRCL’s follow-up notice dated October 27, 2026 said the events of default continued and estimated overdue obligations at Rs 59.2 crore as of September 30, 2026. It reserved the right to seek recovery before the Debt Recovery Tribunal and to initiate proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal.

How much of Dharani Sugars’ borrowing should be payable now?

Dharani Sugars should have classified Rs 96.90 crore of borrowings as current liabilities at September 30, 2026, in the auditor’s view. Although the lender had not recalled the borrowings by the November 13, 2026 review-report date, the auditor concluded that continuing defaults and cancellation of the agreement made the amount due and payable under Indian Accounting Standards.

The auditor said current liabilities and the current portion of borrowings were understated by Rs 96.90 crore, while non-current borrowings were overstated by the same amount. This accounting classification is distinct from IDRCL’s Rs 59.2 crore estimate of overdue obligations, which was stated in the lender’s October 27, 2026 default notice.

The filing does not report a single Rs 334.65 crore payable total. It discloses obligations with separate terms, creditors and accounting treatments, including Rs 219.63 crore owed to directors and related parties, so adding the figures would not establish one confirmed aggregate liability.

What other payment defaults did Dharani Sugars disclose?

Dharani Sugars defaulted under a Rs 61.11 crore one-time settlement of its Sugar Development Fund loan after missing the extended repayment deadline of April 6, 2026. The loan was secured against fixed assets of Unit III, excluding refinery assets and harvester machines, and the auditor said the Government of India’s administrative approval for the settlement stood revoked.

The revocation means the original Sugar Development Fund liability, applicable interest and other charges became repayable, rather than only the Rs 61.11 crore settlement amount. This obligation was separate from the NARCL-IDRCL restructuring, but it added to the defaults reported at September 30, 2026.

Dharani Sugars also had a Rs 36.08 crore second and final instalment payable to sugarcane farmers, or ryots, that remained unpaid at September 30, 2026. The amount arose from the farmer settlement arrangement approved under the former restructuring framework, and the auditor linked settlement of farmer dues to the company’s ability to restart operations.

A loan from 1 Heart Properties Private Limited of Rs 31.31 crore, including Rs 6.61 crore of accrued interest, was overdue at September 30, 2026. The auditor said Dharani Sugars had not provided sufficient evidence on settlement or recovery terms and the resulting financial implications.

Can Dharani Sugars restart its sugar operations?

Dharani Sugars can restart operations only if it mobilises substantial working capital, settles overdue farmer dues and obtains adequate sugarcane for the relevant crushing seasons, according to the auditor. Its manufacturing facilities, major fixed assets and plants had remained idle and non-operational for a prolonged period as of September 30, 2026.

The auditor said sugarcane availability depends on seasonal and agricultural conditions, including climate, cultivation patterns, recovery levels and supply in the command area. This makes the Rs 36.08 crore unpaid farmer settlement relevant not only to liabilities but also to the procurement required for future crushing activity.

For the half year ended September 30, 2026, Dharani Sugars reported a net loss of Rs 37.70 crore, compared with a loss of Rs 40.34 crore in the half year ended September 30, 2025. The loss narrowed by Rs 2.64 crore, although the company remained loss-making in both periods.

Total income from operations declined to Rs 17.05 crore in the half year ended September 30, 2026 from Rs 19.98 crore a year earlier, while finance costs rose to Rs 21.05 crore from Rs 19.57 crore. Finance costs therefore exceeded operating income in both half years and contributed to the latest Rs 37.70 crore loss before tax.

What revival plan has Dharani Sugars disclosed?

Dharani Sugars said on November 2, 2026 that it was in advanced discussions with prospective financiers to fund settlement of IDRCL dues and recommencement of operations. It undertook to submit a comprehensive revival proposal within 15 days and requested IDRCL to withhold coercive action in the interim.

The filing does not say whether IDRCL accepted the request or whether a financier committed funds by November 13, 2026. The auditor also noted that Dharani Sugars was discussing restructuring, settlement and revival arrangements with existing lenders and other stakeholders.

The auditor concluded that the continuing repayment defaults, cancelled restructuring, idle plants and liquidity constraints created a material uncertainty that could cast significant doubt on Dharani Sugars’ ability to continue as a going concern. It also noted that interest had not been provided according to agreed terms on Rs 219.63 crore of borrowings from directors and related parties, understating finance costs and current liabilities in its view.

Conclusion

Dharani Sugars faces a changed debt position after its restructuring cancellation: the auditor said Rs 96.90 crore should be reported as current borrowings at September 30, 2026. The company also disclosed Rs 59.2 crore of IDRCL-estimated overdue obligations, a revoked Rs 61.11 crore Sugar Development Fund settlement and Rs 36.08 crore of unpaid farmer dues.

The next disclosed milestone is the comprehensive revival proposal that Dharani Sugars said on November 2, 2026 it would submit within 15 days. Investors should watch whether financing is secured, whether IDRCL begins Debt Recovery Tribunal or National Company Law Tribunal action, and whether farmer dues and sugarcane supplies can be resolved before any future crushing season.