McLeod Russel India Q2 Profit Rises as Auditor Flags Rs 414 Crore

McLeod Russel India Limited reported standalone profit of Rs 34.38 crore for the quarter ended September 30, 2026, but Lodha & Co LLP issued an adverse conclusion after identifying Rs 414.21 crore of doubtful inter-corporate deposits without provision.

Why did the reviewer issue an adverse conclusion on the September results?

Lodha & Co LLP concluded that McLeod Russel's standalone financial results for the quarter and six months ended September 30, 2026 were not prepared fairly in all material respects. The conclusion was issued on November 14, 2026, alongside the company's filing of unaudited results with the stock exchanges.

The reviewer said several unresolved accounting matters were expected to have a material combined effect on the standalone financial statements. It further stated that the results, read with their notes, did not fairly disclose information required under Indian Accounting Standards and the Securities and Exchange Board of India Listing Obligations and Disclosure Requirements Regulations, 2015.

The review was conducted under Standard on Review Engagement 2410. A limited review relies mainly on inquiries and analytical procedures and provides moderate assurance, rather than the level of assurance provided by a full audit.

What were McLeod Russel's reported Q2 and half-year financial results?

McLeod Russel reported standalone revenue from operations of Rs 391.93 crore in the September 2026 quarter, compared with Rs 324.17 crore in the year-earlier quarter. Total income rose to Rs 392.71 crore from Rs 324.38 crore, while profit for the period increased to Rs 34.38 crore from Rs 29.19 crore.

For the six months ended September 30, 2026, revenue from operations was Rs 596.36 crore, against Rs 492.20 crore in the corresponding period of 2025. The company reported a half-year profit of Rs 19 crore, compared with a loss of Rs 10.94 crore a year earlier.

The board considered and approved unaudited standalone and consolidated results on November 14, 2026. The material provided does not state corresponding consolidated revenue, profit, margin, or earnings-per-share figures for the September quarter.

What is the Rs 414.21 crore inter-corporate deposit issue?

The largest quantified matter in the reviewer’s conclusion was Rs 414.21 crore of inter-corporate deposits, including interest accrued up to March 31, 2019, that remained unprovided as of September 30, 2026. Lodha & Co LLP described this balance as doubtful of recovery and said its recoverability was prejudicial to McLeod Russel's interests.

The deposits and accrued interest were stated at Rs 2,860.50 crore, against which McLeod Russel had created Rs 2,446.29 crore of provisions in earlier years. Separately, the disclosure referred to Rs 2,761.09 crore of outstanding deposits against which the same Rs 2,446.29 crore provision had been made. The company said the final recoverable amount could not currently be determined as legal recovery steps continued.

The unprovided balance was substantially higher than the Rs 34.38 crore standalone profit reported for the September quarter. This comparison highlights why the reviewer treated the matter as material, although the filing does not quantify the eventual financial impact of recovery proceedings.

Which other accounting and liability matters were identified?

The adverse conclusion also referred to the restructuring of borrowings, unrecognised interest, asset valuation and impairment, lease rent, statutory liabilities, deferred-tax assets, and unreconciled debit and credit balances. The filing did not quantify the financial effect of several of these matters.

McLeod Russel disclosed total statutory liabilities of Rs 265.30 crore as of September 30, 2026. It said potential interest, penalties and reconciliation effects remained pending. The company also disclosed a provident-fund arrears demand of Rs 191.11 crore, for which repayment approval covers three years.

How does the adverse conclusion affect investors and operations?

The reported improvement in quarterly revenue and profit must be considered alongside the adverse conclusion on the standalone results. The reviewer’s position means that the reported figures are subject to material concerns involving provisioning, recoverability, liabilities and other accounting treatments.

No share-price movement, customer impact, operational disruption, or quantified consolidated impact was provided in the disclosures. Investors therefore have the reported operating figures and the reviewer’s stated accounting concerns, but not a quantified estimate of how each unresolved matter could alter the standalone financial position.

The board meeting on November 14 completed the scheduled consideration of the September-quarter and half-year results. The company had earlier kept its trading window closed for designated persons and their immediate relatives from October 1 until 48 hours after the results declaration.

Conclusion

McLeod Russel's September-quarter filing combines higher reported standalone revenue and profit with an adverse limited-review conclusion. The Rs 414.21 crore unprovided doubtful inter-corporate deposit balance, along with statutory liabilities and other unresolved accounting matters, is central to interpreting the reported financial performance.

The key issue to watch is the company’s progress on legal recovery of the inter-corporate deposits and resolution of the accounting matters identified by Lodha & Co LLP. Investors will also need to monitor future disclosures for any provision changes, liability reconciliation, or quantified effect on standalone and consolidated accounts.