Shivchem Agro restatement changed FY2024 profit by Rs 5.10 lakh

Shivchem Agro Limited restated its three-year IPO financial record after recognising previously unprovided gratuity, changing depreciation from written-down value to straight-line method, revising tax entries and reclassifying IPO costs. The largest net profit change was a Rs 5.10 lakh increase in FY2024 profit after tax, from Rs 1.24 crore before adjustments to Rs 1.29 crore as restated.

Why did Shivchem Agro restate its IPO accounts?

Shivchem Agro prepared restated financial statements for inclusion in the offer document for its proposed initial public offering, or IPO, to be filed with the Bombay Stock Exchange. The statements cover the years ended 31 March 2024, 2025 and 2026 and apply Indian generally accepted accounting principles, or Indian GAAP, on an accrual basis and historical-cost convention.

Shivchem Agro said no audit qualifications requiring corrective adjustments had been identified during the restated period. However, the restatement included adjustments to profit, tax and shareholders’ funds, while corresponding income, expenses, assets and liabilities were regrouped or reclassified to meet Securities and Exchange Board of India regulations.

Shivchem Agro was incorporated as a private company on 12 September 2021 and became an unlisted public company following an extraordinary general meeting resolution dated 22 October 2024. The company, which manufactures agrochemical products and is registered under the Micro, Small and Medium Enterprise Development Act, 2006, therefore presented a three-year record for the proposed IPO.

How much did the Shivchem Agro restatement change profits?

Shivchem Agro’s adjustment schedule shows that restatement increased FY2024 profit after tax by Rs 5.10 lakh, reduced FY2025 profit after tax by Rs 51,000 and increased FY2026 profit after tax by Rs 4.42 lakh. The restated profit-and-loss statement reports FY2026 profit after tax of Rs 3.25 crore and FY2025 profit after tax of Rs 2.60 crore, while the adjustment schedule shows Rs 3.2485 crore and Rs 2.6014 crore respectively.

FY2025 contained several offsetting entries: a Rs 2.88 lakh gratuity adjustment, Rs 13.15 lakh share-issue-expense adjustment, a Rs 11.70 lakh depreciation adjustment, Rs 1.33 lakh deferred-tax adjustment and a Rs 6.17 lakh income-tax adjustment. The combined effect was the Rs 51,000 reduction in profit after tax reported in the restatement schedule.

Revenue from operations increased to Rs 33.82 crore in FY2026 from Rs 27.47 crore in FY2025 and Rs 10.94 crore in FY2024. Restated profit after tax rose over the same period to Rs 3.25 crore in FY2026 from Rs 2.60 crore and Rs 1.29 crore, but comparison depends on the disclosed straight-line depreciation, gratuity and tax policies continuing to be applied.

What did gratuity and depreciation changes do to Shivchem Agro accounts?

Shivchem Agro recognised gratuity provisions in FY2024 and FY2025 because the previously signed financial statements had not recognised the provision under Accounting Standard 15, Employee Benefits. Gratuity is a defined-benefit post-employment plan, meaning the balance-sheet liability is the present value of the obligation rather than only an employer contribution due for the year.

An independent actuary used the projected unit credit method to measure Shivchem Agro’s gratuity obligation. The present value of the defined-benefit obligation was Rs 5.11 lakh at 31 March 2026, compared with Rs 2.88 lakh at 31 March 2024 and Rs 10 at 31 March 2025; the related expense was Rs 4.55 lakh, Rs 4.93 lakh and Rs 2.81 lakh respectively.

Shivchem Agro also changed depreciation from the written-down value, or WDV, method to the straight-line method, or SLM. Under SLM, depreciation is allocated evenly through an asset’s useful life, with the company using 30 years for factory buildings, 15 years for plant and machinery, 10 years for motor vehicles and three years for computers.

The depreciation change added Rs 9.60 lakh to FY2024 profit in the adjustment schedule but reduced FY2025 profit by Rs 11.70 lakh. Shivchem Agro also adjusted deferred tax because depreciation creates timing differences between accounting and taxable profit, and because deferred tax had not previously been recognised on gratuity provisions under Accounting Standard 22, Accounting for Taxes on Income.

How did Shivchem Agro treat IPO costs, tax and shareholders’ funds?

Shivchem Agro reclassified Rs 13.15 lakh of FY2025 IPO-related costs from the statement of profit and loss to deferred IPO expenses under other current assets. The company said the reclassification followed subsequent approval of its draft red herring prospectus and covered costs that had earlier been charged to profit or loss.

Deferred IPO expenses totalled Rs 23.97 lakh in FY2026 and Rs 13.15 lakh in FY2025. Shivchem Agro identified IPO audit-certification fees, legal and professional charges, filing fees and regulatory costs as included categories, and said these capital-nature costs would be adjusted against the securities premium account if the IPO is completed successfully.

Income-tax adjustments added Rs 5.34 lakh to FY2026 profit after tax but reduced FY2025 and FY2024 profit after tax by Rs 6.17 lakh and Rs 1.67 lakh respectively. For FY2026, Shivchem Agro attributed the tax revision to movements in income-tax liability, advance tax, tax deducted at source and taxes paid, intended to reconcile its income-tax position.

Restated shareholders’ funds were Rs 12.90 crore at 31 March 2026, Rs 9.54 crore at 31 March 2025 and Rs 1.50 crore at 31 March 2024. Compared with audited figures, restatement reduced FY2026 shareholders’ funds by Rs 2.76 lakh and FY2025 funds by Rs 7.20 lakh, while increasing FY2024 funds by Rs 6.47 lakh.

Conclusion

Shivchem Agro’s restatement changed more than the presentation of its IPO accounts. It introduced previously unrecognised employee-benefit provisions, replaced WDV depreciation with SLM, recognised related tax effects, revised income-tax balances and moved Rs 13.15 lakh of FY2025 IPO costs out of profit or loss, producing a Rs 5.10 lakh increase in FY2024 profit after tax.

The next disclosed item to watch is the planned treatment of Rs 23.97 lakh of FY2026 and Rs 13.15 lakh of FY2025 deferred IPO expenses. Shivchem Agro says those costs will be adjusted against securities premium only upon successful completion of the IPO, while future accounts will show whether the straight-line depreciation, actuarial gratuity measurement and tax reconciliation remain in place.