Johnsoncab restatement cut FY25 profit after tax by Rs 10.21 lakh

Johnsoncab Electricals Limited restated its IPO-period financial history, cutting FY25 profit after tax by Rs 10.21 lakh to Rs 5.4644 crore from Rs 5.5665 crore in the audited accounts. The revisions recognised gratuity, prepaid insurance, tax-related interest, outstanding expenses, prior-period items and deferred-tax effects in the periods identified by the company.

Why did Johnsoncab restatement cut FY25 profit after tax by Rs 10.21 lakh?

Johnsoncab restatement cut FY25 profit after tax because the restated statements reassigned costs and tax effects to the accounting periods to which the company said they related. For the year ended March 31, 2025, audited profit after tax was Rs 5.5665 crore, while restated profit after tax was Rs 5.4644 crore. The Rs 10.21 lakh reduction means the IPO financial information presents a different FY25 profit base from the earlier audited financial statements.

The reconciliation identifies seven FY25 adjustment categories: gratuity of negative Rs 8.45 lakh, income-tax adjustment of Rs 0.75 lakh, prepaid-insurance adjustment of negative Rs 2.97 lakh, expense provision of negative Rs 0.60 lakh, interest on income-tax payable of negative Rs 1.11 lakh, prior-period expense adjustment of Rs 9.88 lakh and deferred-tax adjustment of Rs 2.20 lakh. These listed FY25 rows do not arithmetically bridge audited profit of Rs 5.5665 crore to restated profit of Rs 5.4644 crore. Johnsoncab nevertheless reports Rs 5.4644 crore as the restated FY25 profit after tax.

Which accounting adjustments changed Johnsoncab’s earlier results?

Johnsoncab said the adjustments applied accrual accounting and matching of income and expenditure to the relevant periods. Accrual accounting records income and costs when they arise rather than when cash changes hands. Johnsoncab said prepaid insurance was adjusted so that only the premium applicable to each period was recognised as expense, while outstanding or previously unprovided expenses were recognised in the years to which they related.

Gratuity was a material adjustment because Johnsoncab said the earlier audited financial statements had not provided for it. Gratuity is an employee benefit governed in the disclosure by the Gratuity Act, 1972; employees completing five years of service are entitled to the specified benefit. Johnsoncab said the provision relating to prior years was adjusted against previous-years surplus, with FY25 profit carrying a negative Rs 8.45 lakh gratuity adjustment and FY24 profit a negative Rs 5.98 lakh adjustment.

The restatement also covered current-tax provisioning, interest on income-tax liabilities and deferred tax. Deferred tax is the tax effect of timing differences between accounting recognition and tax recognition. Johnsoncab cited Accounting Standard 5, or AS 5, for prior-period expense adjustments arising from errors or omissions in earlier statements; the FY25 reconciliation records a positive Rs 9.88 lakh under that category.

How did Johnsoncab restatement change FY24 and FY26 profits?

Johnsoncab restatement reduced FY24 profit after tax by Rs 6.67 lakh but increased FY26 profit after tax by Rs 12.33 lakh. Audited FY24 profit after tax of Rs 2.5897 crore became Rs 2.5230 crore for the year ended March 31, 2024. Audited FY26 profit after tax of Rs 13.2962 crore became Rs 13.4195 crore for the year ended March 31, 2026.

FY24 included negative adjustments of Rs 5.98 lakh for gratuity, Rs 0.75 lakh for income tax, Rs 4.99 lakh for expense provision and Rs 1.92 lakh for income-tax interest. It also included positive adjustments of Rs 2.97 lakh for prepaid insurance and Rs 3.99 lakh for deferred tax. The rows total a negative Rs 6.68 lakh, differing by Rs 0.01 lakh from the disclosed Rs 6.67 lakh movement, consistent with a rounding difference.

FY26 included a positive Rs 5.59 lakh expense-provision adjustment and positive Rs 12.93 lakh recognition of interest on income-tax payable, partly offset by negative Rs 6.19 lakh of deferred tax. Those three rows equal the disclosed Rs 12.33 lakh increase. For the period ended August 31, 2026, the reconciliation reports both audited and restated profit after tax at Rs 8.6361 crore, distinguishing the annual revisions from the latest partial-period result.

What did the restatement do to Johnsoncab shareholders’ funds?

Johnsoncab restatement reduced shareholders’ funds at March 31, 2025 by Rs 36.14 lakh and at March 31, 2024 by Rs 16.05 lakh. Restated shareholders’ funds were Rs 14.2426 crore at March 31, 2025, compared with Rs 14.6040 crore in the audited statements. At March 31, 2024, the corresponding figures were Rs 8.8770 crore restated and Rs 9.0375 crore audited.

The March 31, 2025 shareholders’ funds reconciliation includes negative Rs 14.43 lakh for gratuity, negative Rs 5.59 lakh for expense provision, negative Rs 12.93 lakh for income-tax interest and negative Rs 9.38 lakh for an opening-balance adjustment. A positive Rs 6.19 lakh deferred-tax adjustment partly offset those entries. The Rs 14.43 lakh gratuity entry differs from the FY25 profit reconciliation’s Rs 8.45 lakh charge because the shareholders’ funds bridge captures accumulated balance-sheet effects.

At March 31, 2026 and August 31, 2026, the reconciliations show no difference between audited and restated shareholders’ funds. Both measures were Rs 31.4421 crore at March 31, 2026 and Rs 40.0783 crore at August 31, 2026. The concentration of shareholders’ funds changes in FY24 and FY25 reflects the disclosed adjustment of earlier-period gratuity, expenses, tax interest and opening balances.

How does the gratuity liability affect the restated accounts?

Johnsoncab reported an unfunded net defined-benefit gratuity liability of Rs 23.81 lakh at March 31, 2025 and Rs 15.36 lakh at March 31, 2024. A defined-benefit obligation is the present value of the employee benefit expected to be payable, measured using actuarial assumptions. Johnsoncab reported no plan assets in either year, meaning the disclosed liability was not offset by assets held for the gratuity plan.

The obligation rose to Rs 31.52 lakh at March 31, 2026 and Rs 37.53 lakh at August 31, 2026. Gratuity expense recognised in the profit and loss statement was Rs 8.45 lakh in FY25, Rs 7.71 lakh in FY26 and Rs 6.01 lakh for the period ended August 31, 2026. The August 31, 2026 valuation used a 7.05% discount rate, 10.00% salary-growth rate, 10.00% attrition rate and retirement age of 58 years.

The gratuity liability can change as employees complete additional service, salary assumptions change or actuarial gains and losses arise. At August 31, 2026, the Rs 37.53 lakh obligation comprised Rs 1.90 lakh of current liability and Rs 35.63 lakh of non-current liability. The restated figures will continue to depend on recognition of the employee-benefit obligation and the assumptions used to measure it.

Conclusion

Johnsoncab’s restatement changed the profit and shareholders’ funds history used in its IPO financial information for FY24 through FY26. FY25 had the largest disclosed annual profit reduction, at Rs 10.21 lakh, while the corrections also reduced March 31, 2025 shareholders’ funds by Rs 36.14 lakh. The adjustments show how previously unprovided employee benefits, expenses and tax-related items altered reported results when allocated to the periods identified by the company.

The main unresolved matter is the FY25 profit bridge, because the disclosed adjustment rows do not add to the difference between audited and restated profit after tax. Readers can also watch the gratuity obligation, which reached Rs 37.53 lakh at August 31, 2026 with no plan assets, and any subsequent disclosure on changes in salary growth, discount-rate or attrition assumptions.