McNally Bharat reports Rs 40.69 crore first-half loss after charge

McNally Bharat Engineering Company Limited reported a standalone net loss of Rs 40.69 crore for the six months ended 30 September 2026, as a Rs 24 crore exceptional expense outweighed total income of Rs 37.08 crore, up from Rs 34.50 crore a year earlier. The reported loss followed a Rs 16.69 crore loss before exceptional items and tax.

Why did McNally Bharat report a first-half loss?

McNally Bharat reported a Rs 40.69 crore loss before tax and after tax for the six months ended 30 September 2026 because its Rs 16.69 crore loss before exceptional items was compounded by a Rs 24 crore exceptional expense. Total comprehensive loss was Rs 41.02 crore after Rs 33.01 lakh of remeasurement losses on post-employment benefit plans.

The comparison with the previous first half is affected principally by exceptional items. In the six months ended 30 September 2025, McNally Bharat recorded a Rs 3,918.13 crore exceptional gain, resulting in profit before tax of Rs 3,579.91 crore and total comprehensive income of Rs 3,580.11 crore. Basic and diluted loss per share was Rs 12.21 in the latest period, compared with earnings per share of Rs 1,073.97 a year earlier.

How did McNally Bharat’s income and costs change?

McNally Bharat increased total income by Rs 2.57 crore year on year to Rs 37.08 crore in the first half of 2026-27. Income from operations rose to Rs 34.68 crore from Rs 33.37 crore, while other income increased to Rs 2.39 crore from Rs 1.13 crore.

The loss before exceptional items and tax narrowed to Rs 16.69 crore from Rs 107.96 crore in the prior-year period. Total expenses were Rs 53.77 crore in the latest half year, down from Rs 142.46 crore, based on the difference between total income and the reported loss before exceptional items and tax.

Finance costs fell to Rs 6.75 crore from Rs 210.15 crore, and depreciation and amortisation expenses declined to Rs 84.96 lakh from Rs 1.29 crore. The cash-flow statement also records Rs 1.91 crore of interest income for the latest first half, compared with Rs 1.01 crore a year earlier, while cash generated from operations was Rs 73.69 lakh versus Rs 32.11 crore.

What caused McNally Bharat’s exceptional expense?

McNally Bharat’s Rs 24 crore exceptional expense includes a provision and interest linked to a National Company Law Tribunal, or NCLT, order dated 12 June 2026 concerning security-deposit adjustments involving three joint-venture entities. The order held that Rs 15.18 crore of adjustments, from a total Rs 41.49 crore, constituted preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016.

Following legal advice obtained in the quarter ended 30 June 2026, McNally Bharat recognised a Rs 15.18 crore provision and Rs 7.17 crore of interest through 30 September 2026. Those disclosed items total Rs 22.35 crore, while the half-year exceptional expense was Rs 24 crore; the filing does not separately identify the remaining Rs 1.65 crore difference.

The NCLT directed the named joint ventures to refund or repay Rs 15.18 crore to the corporate debtor or resolution professional, for distribution to the committee of creditors under the resolution plan. The order stipulated payment within 60 days of receipt, with interest at 9% a year, but McNally Bharat has filed a recall application before the NCLT and said the hearing remains pending.

What changed in McNally Bharat’s balance sheet and cash flow?

McNally Bharat’s total equity fell by Rs 41.02 crore to Rs 529.67 crore at 30 September 2026 from Rs 570.69 crore at 31 March 2026. Other equity declined to Rs 496.34 crore from Rs 537.36 crore, while equity share capital was unchanged at Rs 33.33 crore.

Total assets decreased to Rs 816.03 crore from Rs 823.07 crore over the same six-month period. Trade receivables were Rs 165.52 crore, slightly below Rs 165.75 crore at 31 March, while cash and cash equivalents rose to Rs 4.34 crore from Rs 3.56 crore.

Current liabilities increased to Rs 283.79 crore from Rs 249.71 crore. Other current liabilities rose to Rs 59.46 crore from Rs 30.96 crore and other financial liabilities increased to Rs 99.68 crore from Rs 93.48 crore, while current borrowings edged down to Rs 94.46 crore from Rs 94.84 crore.

Operating activities produced net cash inflow of Rs 63.42 lakh in the latest half year, compared with Rs 32.99 crore a year earlier. Investing activities generated Rs 1.21 crore and financing activities used Rs 1.06 crore, leaving a net increase of Rs 78.05 lakh in cash and cash equivalents, against an increase of Rs 5.23 crore in the corresponding prior-year period.

What did the auditor conclude about McNally Bharat’s results?

Singhi & Co. issued an adverse conclusion on McNally Bharat’s standalone results on 12 November 2026, stating that the financial statement had not been prepared in accordance with Indian Accounting Standard 34 and Regulation 33 of the SEBI Listing Regulations. The conclusion reflected matters relating to deferred tax assets, bank balances and joint controlled operations.

The auditor identified Rs 517.07 crore of net deferred tax assets carried at 30 September 2026 as the largest matter. Management said it expects improved business performance and profitability and has unabsorbed business losses and depreciation available for set-off, but the auditor said there was no convincing evidence or reasonable certainty of future taxable profit to support recognition under Indian Accounting Standard 12.

The auditor said derecognising the deferred tax asset would have increased the half-year net loss and total comprehensive loss by Rs 517.07 crore and reduced other equity by the same amount. It also could not comment on the completeness of bank balances, including Rs 2.34 crore appearing in McNally Bharat’s name in bank statements but excluded from reported bank balances pending details and legal advice.

McNally Bharat is the lead partner in three unincorporated joint arrangements comprising five contracts awarded by Mahanadi Coalfields Limited and South Eastern Coalfields Limited. The auditor said the standalone accounts did not recognise related contract assets, liabilities, revenue, costs, receivables and payables, and that the joint arrangements’ books for the period ended 30 September 2026 were not available for review.

Conclusion

McNally Bharat’s first-half figures show that income growth of Rs 2.57 crore and a narrower pre-exceptional loss did not offset the Rs 24 crore exceptional expense. The reported Rs 40.69 crore loss reduced equity by Rs 41.02 crore, while the substantial reversal from the prior-year profit reflects the absence of that period’s Rs 3,918.13 crore exceptional gain.

The next disclosed matters to watch are the pending NCLT hearing on McNally Bharat’s recall application concerning the Rs 15.18 crore preferential-transaction order and arrangements for the Rs 30 crore buyback of 5% equity shares from financial creditors, plus interest from 17 February 2026. Management also said it will continue evaluating the Rs 9.60 crore Employees’ Provident Fund Organisation demand, whose recovery remains stayed by the Jharkhand High Court.