Jindal Poly Films auditor cannot verify Nashik inventory

Jindal Poly Films Limited’s auditor could not verify Rs 277.7365 crore of inventory at a fire-hit Nashik subsidiary as of September 30, 2026, leaving any required adjustment to inventory, period loss, other equity and related disclosures unresolved. The limitation followed the May 21, 2025 factory fire and incomplete physical stock verification.

Why could Jindal Poly Films’ auditor not verify the Nashik inventory?

Jindal Poly Films’ auditor could not observe a complete physical verification because the May 21, 2025 fire affected parts of the Nashik factory, while rebuilding work created storage constraints. Usable waste inventory that was not affected by the fire was kept in mixed condition, preventing complete verification at March 31, 2026.

Management and a surveyor had checked inventory after the fire in the previous year and wrote off stock identified as fire-damaged. Subsequently, a third party engaged by the subsidiary performed verification, but not for all items, and used estimation methods for quantities in some cases. The auditor said it remained unable to perform and observe physical verification at March 31, 2026 and up to its November 14, 2026 review report.

The subsidiary recognised Rs 277.7365 crore as the carrying amount of the affected inventory at September 30, 2026, pending physical verification. The filing distinguishes this stock from inventory already determined to be damaged and written off after the 2025 fire.

What does the qualified review conclusion mean for Jindal Poly Films?

The qualified review conclusion means the auditor could not determine whether any adjustment was needed to the Rs 277.7365 crore carrying value at September 30, 2026. The auditor performed alternative procedures, including checking subsequent stock movements, quantitative records and related documents, and obtained evidence on the inventory’s existence.

Those procedures did not allow the auditor to determine possible quantity excesses or shortages, which it said can only be identified when physical verification is performed and observed in a future period. The auditor therefore could not determine any consequential effect on the group’s loss for the period, other equity or financial-result disclosures.

The review was conducted under Indian Accounting Standard 34, or Ind AS 34, which governs interim financial reporting. The auditor stated that a limited review provides moderate assurance and is narrower than an audit; except for the inventory matter, it said nothing had come to its attention indicating a material misstatement in the unaudited consolidated results.

How did the May 2025 Nashik fire affect Jindal Poly Films’ accounts?

Jindal Poly Films said the Nashik fire damaged property, plant and equipment, capital work-in-progress, inventory and related goods and services tax. For the year ended March 31, 2026, the subsidiary wrote off Rs 1,561.2472 crore across those items and wrote back Rs 497.0028 crore of packaging incentive scheme income attributable to affected property, plant and equipment.

The fire assessment also changed depreciation and government-grant accounting. Once management completed its assessment, the subsidiary reversed Rs 43.415 crore of depreciation and Rs 16.6663 crore of government-grant amortisation during the quarter and year ended March 31, 2026. It had continued to account for both through December 2025 while the loss assessment was under way.

The subsidiary has filed insurance claims relating to the May 2025 fire and a January 2023 fire. Jindal Poly Films said a claim will be recognised only when it meets the recognition criteria under Ind AS, and the September 30, 2026 filing does not state a recognised insurance recovery amount.

What were Jindal Poly Films’ reported September 2026 results?

Jindal Poly Films reported revenue from operations of Rs 1,433.8617 crore for the six months ended September 30, 2026, down from Rs 1,666.7761 crore in the corresponding six months of 2025. Net profit for the six-month period was Rs 22.0231 crore, compared with Rs 23.0975 crore in the restated prior-year period.

For the September 2026 quarter, the group reported a net loss of Rs 86.1741 crore, compared with a net loss of Rs 13.4086 crore in the September 2025 quarter. Revenue rose to Rs 738.0656 crore from Rs 583.3692 crore, while total expenses increased to Rs 856.7354 crore from Rs 671.9653 crore.

The September-quarter expenses included a Rs 96.4334 crore net loss on fair valuation of investments. Packaging films recorded revenue of Rs 430.6433 crore and a pre-finance-cost-and-tax loss of Rs 25.6649 crore, while nonwoven fabrics reported revenue of Rs 226.1814 crore and profit of Rs 35.0886 crore on the same basis. The filing does not allocate the Nashik inventory balance to a reportable segment.

What other matters remain unresolved at Jindal Poly Films?

Jindal Poly Films disclosed a separate arbitration matter involving Rs 292 crore borrowed by a subsidiary from the holding company as of September 30, 2026. An investor shareholder raised concerns over a possible breach of a reserved matter under a shareholders’ agreement dated March 16, 2022, and the subsidiary and Jindal Poly Films received a notice of arbitration on October 16, 2026.

The auditor drew attention to the Rs 292 crore loan but did not modify its conclusion for that matter. The subsidiary continues to carry the loan pending resolution of the arbitration, with any necessary action to follow the outcome. This matter is separate from the inventory qualification.

The review also included seven subsidiaries whose unaudited management-certified results represented total assets of Rs 597.7389 crore and a six-month net loss of Rs 20.2542 crore. The auditor said those results were not material to the group, while a foreign subsidiary and three step-down subsidiaries with Rs 400.8907 crore of assets were reviewed by another auditor.

Conclusion

The central issue in Jindal Poly Films’ September 2026 consolidated review is the auditor’s inability to verify Rs 277.7365 crore of inventory at the fire-hit Nashik subsidiary. Alternative procedures supported evidence of existence, but did not allow the auditor to rule out quantity differences or quantify any effect on the group’s inventory, loss or other equity.

The next event to watch is a future physical verification that the auditor can observe, because that process is required to identify any excesses or shortages. The filing also leaves the October 16, 2026 arbitration over the subsidiary’s Rs 292 crore holding-company loan unresolved, while insurance claims will be recognised only if they meet Ind AS recognition criteria.