SFC foreign accounts relied on management certification

SFC Environmental Technologies Limited consolidated three foreign subsidiaries using unaudited financial information certified by management rather than component accounts audited by its reporting auditor or another auditor. The three entities recorded combined revenue of Rs 39.031 crore in the year ended March 31, 2026, up from Rs 20.070 crore in FY25, and assets of Rs 31.493 crore.

Why did SFC rely on management-certified foreign subsidiary accounts?

SFC relied on management-certified foreign subsidiary accounts because the three entities were located outside India and had unaudited financial statements for the periods reviewed. G B C A & Associates LLP said the subsidiaries prepared financial statements under accounting principles generally accepted in their respective countries for FY24, FY25, FY26 and the quarters ended June 30, 2025 and June 30, 2026.

SFC management converted the foreign subsidiaries' financial information from local accounting principles to Indian accounting principles before consolidation. The reporting auditor stated that its opinion, insofar as it concerned these three subsidiaries, was based solely on financial information certified by management, rather than audit reports issued for the underlying component accounts.

Annexure C names the three foreign subsidiaries as SFC Umwelttechnik GmbH, SFC Ektechnika s.r.o and IST- Anlagenbau GmbH. The disclosure gives their combined assets and revenue, including Rs 5.538 crore of revenue for the quarter ended June 30, 2026, but does not disclose a separate financial contribution for each entity.

How large were SFC's management-certified foreign accounts in FY26?

SFC's three management-certified foreign subsidiaries reported Rs 39.031 crore of combined revenue in FY26 and Rs 31.493 crore of total assets at March 31, 2026. Their revenue had been Rs 20.070 crore in FY25 and Rs 20.777 crore in FY24, while assets stood at Rs 23.022 crore and Rs 20.197 crore at the respective March year-ends.

Combined FY26 revenue increased by Rs 18.961 crore from FY25, and total assets increased by Rs 8.471 crore between March 31, 2025 and March 31, 2026. For the June quarter, combined revenue rose by Rs 1.959 crore, from Rs 3.579 crore in 2025 to Rs 5.538 crore in 2026; the report does not provide reasons for either movement.

The financial information establishes the scale of the three subsidiaries as a combined category, but not their individual weight within the category. The report provides no entity-by-entity revenue, assets or cash-flow figures for SFC Umwelttechnik GmbH, SFC Ektechnika s.r.o or IST- Anlagenbau GmbH for FY26.

How did SFC's other subsidiary reporting differ?

SFC's other identified subsidiary components were supported by audit reports from other audit firms, unlike the three management-certified foreign subsidiaries. Chavare Engineering Private Limited was audited by K M P S & Associates in every period from FY24 through the quarter ended June 30, 2026, and G B C A & Associates LLP relied on that auditor's reports for the consolidated amounts.

Chavare Engineering Private Limited recorded Rs 99.922 crore of revenue in FY26, compared with Rs 94.106 crore in FY25 and Rs 92.788 crore in FY24. Its total assets were Rs 68.414 crore at March 31, 2026, compared with Rs 62.627 crore a year earlier, and the reporting auditor said its opinion was not modified in respect of this other-auditor reliance.

A second subsidiary, Chavare Engineering & Endress Plus Hauser JV, had special-purpose financial statements audited by other auditors. It reported Rs 22.317 crore of revenue in FY26, down from Rs 41.124 crore in FY25, and assets of Rs 10.968 crore at March 31, 2026; its FY24 financial statements were subsequently audited on October 25, 2024 after initially being unaudited when the August 8, 2024 statutory audit report was issued.

The distinction is therefore about the stated basis for component information, not whether the amounts were included in SFC's restated consolidated financial information. The audit report identifies other-auditor reports for the two domestic subsidiary components, while it says the foreign subsidiaries' Rs 39.031 crore FY26 revenue was included on management-certified financial information.

What did SFC's reporting auditor conclude about these accounts?

G B C A & Associates LLP did not modify its opinion because of the three foreign subsidiaries' unaudited financial information. Its September 22, 2026 examination report said the restated consolidated financial information had been prepared in accordance with the Companies Act, 2013, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, and the applicable Institute of Chartered Accountants of India guidance note.

That conclusion did not state that the reporting auditor had audited the three foreign subsidiaries. Instead, paragraph 6(c) says the underlying accounts were unaudited, prepared under local accounting principles, converted by SFC management to Indian accounting principles, and certified by management for inclusion in the consolidated information.

The restated information was compiled from audited special-purpose interim consolidated financial statements for the quarters ended June 30, 2025 and June 30, 2026, and audited consolidated financial statements for FY24 through FY26. The report also states that G B C A & Associates LLP had not audited SFC's group financial statements for any date or period after June 30, 2026, limiting the report's stated coverage.

Conclusion

SFC's restated consolidated financial information includes three foreign subsidiaries whose combined FY26 revenue was Rs 39.031 crore and whose March 31, 2026 assets were Rs 31.493 crore, but whose underlying financial information was certified by management rather than audited by the reporting auditor or another auditor. This differs from the disclosed treatment of Chavare Engineering Private Limited and Chavare Engineering & Endress Plus Hauser JV, for which other-auditor reports were furnished.

The next disclosures to watch are those after June 30, 2026, the latest period covered by the reporting auditor's stated work. A later filing could show whether SFC continues to use management-certified information for the same three foreign subsidiaries, provides audited component accounts, or adds entity-level figures that explain the Rs 18.961 crore FY26 revenue increase.