Globesecure auditor flags evidence gap in ₹53.26 crore advances

Globesecure Technologies Limited received a modified limited-review conclusion for the half year ended September 30, 2026 because its auditor could not obtain sufficient appropriate evidence for ₹53.26 crore of advances associated with significantly delayed products or services. The company reported a pre-tax loss of ₹1.8523 crore for the period.

Why did Globesecure receive a modified review conclusion?

Globesecure received a modified conclusion because A R Sodha & Co. lacked sufficient appropriate audit evidence supporting advances aggregating ₹53.26 crore. The auditor said receipt of the relevant products or services had been significantly delayed and therefore did not express an opinion on the carrying amount of those advances or on consequential adjustments that may be required to the half-year results.

The review covered Globesecure’s unaudited standalone financial results for the half year ended September 30, 2026, and the report was dated November 13, 2026. The auditor said a review conducted under Standard on Review Engagements 2410 provides moderate assurance and is substantially narrower than an audit, meaning it does not provide assurance that all significant matters would be identified.

The auditor did not state that the ₹53.26 crore balance was misstated. Its modified conclusion said that, except for the possible effects of the evidence matter, nothing had come to its attention to suggest the results failed to disclose information required under Regulation 33 of the Securities and Exchange Board of India listing regulations or contained a material misstatement.

What has Globesecure disclosed about the delayed advances?

Globesecure said management is reviewing the advances and actively following up with the relevant parties to obtain products or services. In Note 5 to the results, management said it was reasonably certain that it would start receiving the products or services in the second half of the financial year ending March 31, 2027.

Note 5 refers to ₹42.40 crore of business-purpose advances under agreements for the supply of products or services. It says there was a significant delay in receipt and that no products or services had been received from those parties during the six months ended September 30, 2026.

The ₹42.40 crore described in Note 5 is ₹10.86 crore below the ₹53.26 crore aggregate in the auditor’s basis for modified opinion. The filing does not reconcile those two descriptions, and the auditor did not identify how the ₹53.26 crore issue was divided between short-term and long-term advance classifications.

Short-term loans and advances increased by ₹3.8593 crore between March 31, 2026 and September 30, 2026, while long-term loans and advances were unchanged at ₹10.8566 crore. The cash-flow statement recorded a ₹4.8127 crore outflow from changes in loans, advances and other assets in the 2026 half year, compared with a ₹5.6737 crore outflow in the corresponding 2025 half year; that cash-flow line is broader than the advances cited by the auditor.

How did Globesecure’s half-year performance change?

Globesecure’s pre-tax loss widened to ₹1.8523 crore in the half year ended September 30, 2026 from ₹91.67 lakh in the corresponding 2025 half year. Revenue from operations declined to ₹2.5143 crore from ₹7.8819 crore, while total income declined to ₹2.6960 crore from ₹7.8670 crore.

Total expenses fell to ₹4.5483 crore from ₹8.7837 crore, but this was smaller than the decline in revenue from operations. Purchases of stock-in-trade decreased to ₹69.03 lakh from ₹3.7415 crore, employee-benefit expense fell to ₹1.1971 crore from ₹1.8550 crore, and finance cost declined to ₹41.07 lakh from ₹46.21 lakh.

Globesecure operates in one segment, cyber security solutions and other information-technology and IT-enabled-services support and services, so it did not provide segment-level revenue or profitability. Loss per share was ₹1.16 for the 2026 half year, compared with ₹0.56 in the previous-year period, while reserves and surplus declined to ₹27.54 crore at September 30, 2026 from ₹29.3922 crore at March 31, 2026.

Net cash used in operating activities was ₹4.4143 crore in the 2026 half year, compared with net cash generated from operations of ₹80.31 lakh a year earlier. Net financing cash was ₹4.2373 crore, including ₹1.7204 crore from long-term borrowings and ₹2.9276 crore from short-term borrowings, while cash and cash equivalents closed at ₹15.51 lakh.

What other matters did Globesecure’s auditor highlight?

The auditor drew attention to goods and services tax and income-tax demands aggregating ₹29.27 crore, for which Globesecure had filed appeals before the respective appellate authorities. Management said, based on consultants’ advice, that it did not expect an outflow of resources, and the auditor said its conclusion was not modified in respect of this matter.

Note 6 specifically disclosed goods and services tax demands of ₹18.9339 crore, including interest and penalty. Globesecure said it had filed, or was filing, appeals and had made a pre-deposit of ₹18.99 lakh; the supplied text of Note 7 does not show a separate numerical amount for the income-tax matter included in the auditor’s ₹29.27 crore aggregate.

The auditor also highlighted slow-moving inventory with a carrying value of ₹4.6362 crore at September 30, 2026. Management said it had already marked down this inventory by almost 50% and considered no further markdown necessary, while stating that it would consider any additional markdown in the second half of the financial year if required.

Statutory dues of ₹23.91 lakh had not been deposited as at September 30, 2026, according to the review report. The auditor also referred to the secretarial auditor’s observations for the year ended March 31, 2026 on delays and defaults in tax deducted at source payments and delays in provident fund and Employees’ State Insurance contributions; Globesecure had provided interest on delayed payments but not penalties or other consequences, whose impact the auditor said was not ascertainable.

Conclusion

The modified limited-review conclusion places the carrying value of ₹53.26 crore of delayed-supply advances under unresolved evidential scrutiny. That issue accompanies a year-on-year decline in half-year revenue to ₹2.5143 crore, a widening pre-tax loss of ₹1.8523 crore and operating cash use of ₹4.4143 crore, although the auditor did not quantify any adjustment to the advances or the results.

The next disclosed point to watch is the second half of the financial year ending March 31, 2027, when management expects receipt of products or services related to the advances to begin. Management may also consider a further markdown on ₹4.6362 crore of slow-moving inventory if required, while the tax appeals concerning the ₹29.27 crore aggregate demands remain unresolved.