Mrugesh Trading auditors cannot verify core balances

Mrugesh Trading Limited received a qualified limited-review conclusion on its standalone unaudited results for the half year ended 30 September 2026. DDS & Associates said it could not obtain sufficient appropriate evidence over third-party inventory, bill-to-ship-to sales, trade advances of Rs 15.95 crore, and unsecured loans and advances of Rs 2.0056 crore.

Why did Mrugesh Trading receive a qualified review conclusion?

Mrugesh Trading received the qualification because the auditors identified four areas where available evidence did not allow them to verify balances or transactions as at, or for the period ended, 30 September 2026. These areas were inventory held at third-party sites, bill-to-ship-to sales, long-outstanding trade advances, and unsecured loans and advances without formal agreements.

The limited-review report, dated 31 October 2026, was issued by DDS & Associates for the standalone unaudited results submitted under Regulation 33 of the Securities and Exchange Board of India, or SEBI, Listing Obligations and Disclosure Requirements Regulations, 2015. The auditors said the statement was management’s responsibility and had been approved by the board, while their role was to reach a conclusion based on review procedures.

A review under Standard on Review Engagements 2410 involves inquiries and analytical procedures and provides moderate assurance, rather than the assurance associated with a full audit. DDS & Associates said that, except for the possible effects of the four identified matters, nothing had come to its attention to suggest the 30 September 2026 statement failed to make required disclosures or contained a material misstatement.

What could auditors not verify about third-party inventory?

The auditors could not verify the correctness or valuation of agricultural-product inventory stated to be held at various third-party locations as at 30 September 2026. Mrugesh Trading had not maintained adequate storage agreements, custody arrangements, independent confirmations or monitoring controls, according to the limited-review report.

Those missing records meant the auditors could not establish the inventory’s existence, quantity, condition or safeguarding. The report did not disclose a rupee amount for the inventory concerned, but said the absence of sufficient appropriate evidence prevented DDS & Associates from determining whether an adjustment was required to its carrying value and the financial results.

The issue concerns inventory rather than a separately reported operating segment. Mrugesh Trading’s notes to the unaudited results state that it had only one segment for the quarter and half year ended 30 September 2026, so no segment reporting was required. The filing therefore provides no segment-level breakdown that could isolate the inventory exposure.

What is the issue with bill-to-ship-to sales?

The auditors could not verify the occurrence and completeness of Mrugesh Trading’s bill-to-ship-to sales and corresponding purchases for the period under review. They said adequate documents proving goods moved from suppliers to customers were not made available for verification.

The missing evidence included transportation records, proof of delivery, lorry receipts, e-way bills and other documents supporting actual movement and delivery. Without those records, DDS & Associates said it could not assess whether revenue and related expenses had been recognised appropriately under applicable Indian Accounting Standards, or Ind AS, for the half year ended 30 September 2026.

The report did not put a value on the bill-to-ship-to transactions or quantify a potential adjustment. Its conclusion was narrower: the auditors were unable to determine the consequential impact, if any, on Mrugesh Trading’s reported financial results. Unlike the inventory finding, this matter covers both sales recognition and the purchases linked to those sales.

How large are the advances auditors could not assess?

The largest stated balance affected by the qualification was trade advances of Rs 15.95 crore granted to various parties during the period under review. The report also shows Rs 12.15 crore in parentheses alongside that amount, but does not explain the period or basis represented by the parenthetical figure.

DDS & Associates said no corresponding goods had been received against these advances even after what it called a reasonable period, up to 30 September 2026. Management had not provided adequate contractual agreements, party confirmations, expected delivery schedules or other evidence to establish the advances’ terms, conditions and recoverability.

The auditors said they could not comment on whether the trade advances would be recovered through goods or refunds, nor on whether an impairment loss or provision was required. They also could not determine consequential interest income, if any, for the overdue period. These questions relate to balance-sheet recovery and potential charges, not to a quantified restatement in the 31 October 2026 report.

How did unsecured loans and advances change from last year?

Mrugesh Trading’s unsecured loans and advances were Rs 2.0056 crore, compared with Rs 2.682 crore in the previous year, a decrease of Rs 0.6764 crore. Although the reported balance was lower, DDS & Associates said formal loan agreements and other relevant supporting papers had not been made available for verification.

The missing agreements prevented the auditors from independently verifying repayment schedules, tenure, interest obligations, if any, and other contractual conditions. Consequently, they could not comment on whether the Rs 2.0056 crore balance was overdue, recoverable, or capable of creating a consequential effect on financial results for the half year ended 30 September 2026.

This issue is distinct from the Rs 15.95 crore trade-advance matter. The trade-advance qualification focused on goods not received and missing evidence of expected deliveries or refunds, while the unsecured-balance qualification focused on absent loan agreements and unverified repayment and interest terms. The report treats both as possible sources of consequential adjustments but does not calculate their amount.

Conclusion

Mrugesh Trading’s qualified limited review covers core areas of the 30 September 2026 standalone accounts: inventory existence and valuation, sales occurrence and completeness, recovery of Rs 15.95 crore in trade advances, and terms and recovery of Rs 2.0056 crore in unsecured loans and advances. The auditors did not quantify any adjustment, but said they lacked sufficient appropriate evidence to determine possible effects.

The next matter to watch is whether Mrugesh Trading supplies the records identified in the 31 October 2026 report, including third-party inventory custody evidence, sales movement and delivery documents, trade-advance contracts and confirmations, and formal loan agreements. The filing says the unaudited results will be uploaded to the company’s website and the BSE website.