Manraj Housing Finance receives adverse conclusion on results

Manraj Housing Finance received an adverse conclusion on its unaudited September 30, 2026 results after the reviewer said ED attachments affected related assets representing about 99% of assets and unprovided borrowing charges understated loan liabilities by Rs 7.89 crore.

Why did Manraj Housing Finance receive an adverse conclusion?

Manraj Housing Finance received the adverse conclusion because the reviewer said its September 30, 2026 financial statement omitted required disclosures and was affected by five material matters. Ratan Chandak & Co LLP said the statement did not give a true and fair view of Manraj Housing Finance's net loss and other financial information for the quarter and half year.

The report was dated November 9, 2026, the same day the board approved the unaudited standalone results for the quarter and half year ended September 30, 2026. The firm conducted a review under Standard on Review Engagement 2410, which it said provides moderate assurance and is narrower in scope than an audit.

The reviewer identified concerns over related-party asset recoverability, related-party liabilities, a bank-borrowing default, undisclosed recovery proceedings and going-concern uncertainty. It said the significance of these matters meant the interim statement did not meet disclosure requirements under Indian Accounting Standard 34, or Ind AS 34, and the listing regulations.

How much of Manraj Housing Finance's assets are affected by ED action?

About 99% of Manraj Housing Finance's assets were attached by the Enforcement Directorate, or ED, according to the reviewer, which raised concerns over the recoverability and valuation of related-party balances. The report said the ED action involved related parties under investigation under the Prevention of Money Laundering Act.

Around 95% of Manraj Housing Finance's assets comprised advances, deposits, receivables and other recoverable balances from related parties, mainly for acquiring properties and rights. The reviewer said those related parties have beneficial interests connected with the properties, while the related assets have been attached by the ED.

Manraj Housing Finance reported total assets of Rs 19.53 crore at September 30, 2026, compared with Rs 18.51 crore at March 31, 2026. Other non-current assets were Rs 18.60 crore at September 30, while current assets were Rs 93.35 lakh, including cash and cash equivalents of Rs 1.84 lakh.

What related-party and debt exposures did the reviewer identify?

The reviewer identified loans from related parties of Rs 13.29 crore and bank borrowings of Rs 6.87 crore at September 30, 2026. It said related-party loans represented approximately 65% of liabilities and that the connected lenders' interests in the underlying properties created uncertainty over the completeness and accuracy of liabilities.

Related-party loans increased by Rs 11.12 lakh between March 31 and September 30, 2026, while recorded bank borrowings were unchanged at Rs 6.87 crore. Total equity was negative Rs 85.57 lakh at September 30, compared with negative Rs 74.96 lakh at March 31, as other equity moved to negative Rs 5.86 crore from negative Rs 5.75 crore.

The outstanding bank debt was originally borrowed from Jalgaon Peoples Co-Op. Bank Ltd. and transferred to ASREC (India) Ltd., an asset reconstruction company. The reviewer said Rs 6.87 crore had remained outstanding as of February 2020 and that interest had not been provided on the balance after the transfer.

How large are the unprovided charges and recovery claim?

Manraj Housing Finance understated its loan liability by Rs 7.89 crore because it did not provide interest and penal interest on the ASREC-assigned borrowing, according to the reviewer. ASREC's statement showed Rs 3.90 crore of uncharged interest and Rs 52.41 lakh of penal interest for March 1, 2020 to March 31, 2024, plus Rs 3.46 crore of further uncharged interest through September 30, 2026.

The reviewer said the missing charges also understated the September 2026 quarter's loss by Rs 39.49 lakh and the half-year loss by Rs 77.45 lakh. Manraj Housing Finance reported total income of Rs 1.02 lakh in the September quarter, entirely other income, against total expenses of Rs 7.56 lakh; revenue from operations was nil.

ASREC filed Original Application No. 167/2026 before the Debts Recovery Tribunal, Mumbai, or DRT-2, seeking recovery of Rs 11.88 crore from Manraj Housing Finance and others. The tribunal restrained Manraj Housing Finance from dealing with or disposing of secured and specified assets pending disposal of the application, but the reviewer said the September statement did not disclose the proceedings, claim amount, restraint or management's assessment of the effects.

Why did the reviewer question Manraj Housing Finance's ability to continue?

The reviewer said a material uncertainty may cast significant doubt on Manraj Housing Finance's ability to continue as a going concern because it had not carried out significant operating activities for more than three years. It also cited accumulated net losses of Rs 5.86 crore at September 30, 2026, the borrowing default and the failure to provide interest on that borrowing.

The reported results show the limited activity noted in the review. Revenue from operations was nil in both the September 2026 quarter and the half year, while other income was Rs 1.02 lakh for the quarter and Rs 2.04 lakh for the six months ended September 30.

Total expenses were Rs 7.56 lakh in the September quarter and Rs 12.65 lakh in the half year, compared with Rs 40.88 lakh in the prior-year half year. The reviewer linked the going-concern uncertainty to the combined effect of attached assets, related-party arrangements, defaulted debt, unprovided charges and the DRT-2 recovery proceedings rather than to the reported interim loss alone.

Conclusion

The adverse conclusion means the reviewer found that Manraj Housing Finance's September 2026 interim statement did not provide the disclosures needed to give a true and fair view. The central matters were ED attachments affecting related assets representing about 99% of assets, related-party funding of Rs 13.29 crore, and Rs 7.89 crore of unprovided borrowing charges.

The next disclosed matter to watch is the pending DRT-2 application seeking Rs 11.88 crore and the restraint over secured and specified assets until that case is disposed of. The filing also leaves unresolved the accounting for interest and penal interest through September 30, 2026, while the reviewer said significant operations had been absent for more than three years.