Hexagon Nutrition flags uncertainty at two subsidiaries

Hexagon Nutrition Limited’s South African and Uzbek subsidiaries had combined net liabilities of Rs 12.516 crore at September 30, 2026, and the auditor identified material uncertainty over their ability to continue as going concerns. Management nevertheless retained going-concern accounting, citing interventions to revive performance, raise revenue and optimise costs.

Why did Hexagon Nutrition receive a going-concern warning?

Hexagon Nutrition received the warning because Hexagon Nutrition Proprietary Ltd in South Africa and Hexagon Nutrition LLC in Uzbekistan reported combined net liabilities of Rs 12.516 crore at September 30, 2026, arising from historical accumulated losses. The consolidated-results note says their long-term sustainability remains subject to regional market dynamics and future cash flows.

S K Patodia & Associates LLP drew attention to this matter in its limited-review report dated November 14, 2026. The auditor said the circumstances in Note 7 indicated a material uncertainty that may cast significant doubt on the two entities’ ability to continue as going concerns, while stating that its review conclusion was not modified.

The filing says the uncertainty concerns the overseas entities’ future cash flows and their ability to settle future liabilities and operational obligations as they fall due. It does not provide a maturity schedule, separate external-borrowing figure or individual balance sheet for either the South African or Uzbek subsidiary as of September 30, 2026.

The issue applies to two of the five wholly owned subsidiaries identified in the auditor’s report. The other three are Hexagon Nutrition (International) Private Limited and Hexagon Nutrition Healthcare Private Limited in India, and Hexagon Nutrition China Ltd in Hong Kong; the report does not attach the going-concern matter to those three entities.

What is Hexagon Nutrition doing to address the overseas position?

Hexagon Nutrition said management has initiated strategic interventions across the overseas operations to revive business performance, enhance revenue streams and optimise cost structures. As of the November 14, 2026 results announcement, the company had not disclosed a funding amount, revenue target, expected cost saving or deadline for restoring a positive net-asset position.

Management said it retained a reasonable expectation of the entities’ long-term viability and prepared the consolidated results on a going-concern basis. That assessment is conditional on the operational trajectory and regional market conditions in South Africa and Uzbekistan, rather than on a disclosed guarantee or a stated capital injection.

The Rs 12.516 crore net-liability position is linked in the note to historical accumulated losses, not to a separately reported September-quarter loss. The disclosure therefore does not establish how the amount is split between the two subsidiaries or whether either entity generated a profit, loss or cash inflow during the six months ended September 30, 2026.

The auditor’s emphasis of matter differs from a modified conclusion on the consolidated unaudited results. It said nothing had come to its attention suggesting that the statement failed to make required disclosures or contained a material misstatement, while retaining a specific warning on the continuing viability of the two overseas entities.

What do the foreign-subsidiary figures show?

Three foreign subsidiaries, including the South African and Uzbek entities as well as the Hong Kong entity, had combined total assets of Rs 24.658 crore at September 30, 2026. The figure cannot be assigned to the two entities facing the going-concern uncertainty because the filing reports the foreign operations only on an aggregate basis.

The three overseas businesses reported total income of Rs 14.196 crore in the quarter ended September 30, 2026 and Rs 22.592 crore in the six months ended that date. Their aggregate net profit after tax was Rs 1.605 crore for the quarter and Rs 0.814 crore for the half year, but these results were not split by country or company.

Total comprehensive income was negative by Rs 1.043 crore in the September 2026 quarter and by Rs 0.176 crore for the six-month period, despite aggregate profit after tax in both periods. The report says this information for the three overseas subsidiaries was based on interim financial information certified by management and not reviewed by their auditors.

How did Hexagon Nutrition’s consolidated results change?

Hexagon Nutrition’s revenue from operations rose to Rs 213.967 crore in the half year ended September 30, 2026 from Rs 168.045 crore in the corresponding 2025 period. Net profit after tax nevertheless declined to Rs 16.238 crore from Rs 16.592 crore, while profit before tax fell to Rs 20.750 crore from Rs 21.808 crore.

Operating cash flow was an outflow of Rs 8.584 crore in the 2026 half year, compared with an outflow of Rs 1.077 crore a year earlier. The cash-flow statement shows a Rs 52.244 crore increase in inventories, partly offset by a Rs 18.476 crore increase in trade payables and a Rs 5.125 crore decrease in trade receivables.

Consolidated inventories increased to Rs 136.145 crore at September 30, 2026 from Rs 83.901 crore at March 31, 2026. Cash and cash equivalents decreased to Rs 14.282 crore from Rs 15.774 crore, while current borrowings increased to Rs 32.739 crore from Rs 24.496 crore over the same period.

The September 2026 quarter included exceptional expenses of Rs 1.133 crore. Hexagon Nutrition attributed them to phased decommissioning and operational restructuring at its Premix manufacturing facility in Nashik, Maharashtra, including derecognition, impairment or disposal of property, plant and equipment.

Conclusion

The disclosure identifies a specific overseas risk within a group that reported Rs 213.967 crore of half-year revenue: two subsidiaries had Rs 12.516 crore of combined net liabilities and face uncertainty over future cash flows and obligations. The auditor did not modify its limited-review conclusion, but formally highlighted the matter because it may cast significant doubt on the subsidiaries’ ability to continue as going concerns.

The next evidence will be management’s stated revival, revenue-enhancement and cost-optimisation measures at the overseas operations, particularly whether they change the net-liability position. The group’s working-capital position also remains relevant after inventories rose by Rs 52.244 crore during the half year and operating activities used Rs 8.584 crore of cash.