Nicco Parks lease uncertainty raises going-concern risk

Nicco Parks & Resorts Limited faces material uncertainty over its ability to continue as a going concern because its 33-year land lease expired on 28 February 2023 and renewal agreements remained unsigned at 30 September 2026, its auditor said. Nicco Parks management reported that the West Bengal government had given in-principle approval for renewal.

Why is Nicco Parks' lease renewal unresolved?

Nicco Parks' first 33-year land-lease term expired on 28 February 2023, while its renewal application, submitted on 11 October 2022, had not been executed as of 9 November 2026. The land supports Nicco Parks' amusement park and its food and beverages, or F&B, and other recreational operations. Management said the application was under active consideration by the Department of Tourism, Government of West Bengal.

The arrangements extend beyond a routine lease renewal because a Joint Sector Agreement dated 23 February 1990 became inoperative, according to Nicco Parks. That agreement provided for a 33-year land term and two renewal terms of the same duration, but Nicco Corporation Limited, formerly The National Insulated Cable Company of India Limited, entered liquidation proceedings and its Nicco Parks shareholding was sold.

Management said the Government of West Bengal had given in-principle approval and that Nicco Parks expects the lease to be renewed. Pending final terms, Nicco Parks has continued to make provisions, including depreciation, and to pay fees and charges under the earlier agreement. Those measures underpin management's use of the going-concern basis for the 30 September 2026 standalone accounts, but do not constitute an executed renewal.

What did Nicco Parks' auditor say about going concern?

Nicco Parks' auditor said pending formalisation of the relevant agreements creates material uncertainty regarding the company's ability to continue as a going concern. Lodha & Co LLP made that statement in the Other Matters section of its limited-review report dated 9 November 2026. The firm did not modify its review conclusion for this matter.

The report covered unaudited standalone results for the quarter and half year ended 30 September 2026, rather than a full audit. Lodha & Co LLP said a limited review provides moderate assurance and is narrower than an audit. Its stated uncertainty relates specifically to unsigned agreements, despite management's expectation of a renewal following in-principle approval.

The auditor separately identified uncertainty around land used by the F&B and other recreational facilities segment. It said the financial impact could not currently be determined or commented upon because a state-government decision and an agreement remained pending. This leaves both the principal lease renewal and the later operating arrangement subject to formal resolution.

What land and operations are affected at Nicco Parks?

Nicco Parks said the Department of Tourism repossessed approximately 1.46 acres on 8 November 2025 that had been used for its F&B and other recreational facilities segment. The repossession and transition occurred before completion or formalisation of arrangements under the original lease framework. Nicco Parks said it continued the operations to maintain public services and customer continuity.

Nicco Parks is managing those activities on behalf of the tourism corporation pending a formal arrangement. For the half year ended 30 September 2026, it recognised Rs 7.16 lakh of management and supervision charges in other income, compared with Rs 31.10 lakh for the year ended 31 March 2026. The periods differ in length and are therefore not directly comparable.

Nicco Parks said expenditure incurred or allocated for the F&B and recreational activities has been recovered on an ongoing basis from the tourism corporation. It has made representations to state departments and remains in discussions with government authorities and entities. The decision was still awaited on 9 November 2026, and Nicco Parks said consequential accounting adjustments, if any, would follow its determination.

How did Nicco Parks perform in the half year ended September 2026?

Nicco Parks reported revenue from operations of Rs 29.27 crore for the half year ended 30 September 2026, down from Rs 37.80 crore a year earlier, while profit before tax declined to Rs 4.70 crore from Rs 27.49 crore. The earlier period included a Rs 15.41 crore exceptional gain from the buyback of shares in former associate Nicco Engineering Services Limited. Before that exceptional item, prior-year profit before tax was Rs 12.08 crore.

Park Operations remained Nicco Parks' largest revenue source, contributing Rs 27.18 crore in the latest half year, compared with Rs 34.52 crore a year earlier. Consultancy, contracts and sale of ride components increased to Rs 90.39 lakh from Rs 10.66 lakh, while F&B and other recreational facilities revenue declined to Rs 1.18 crore from Rs 3.17 crore. Nicco Parks said prior-period figures are not comparable with the current period because of the 1.46-acre repossession arrangement.

The September 2026 quarter recorded a net loss of Rs 1.71 crore, compared with a net profit of Rs 17.59 lakh in the September 2025 quarter. Park Operations recorded a segment loss of Rs 2.32 crore, compared with a Rs 64.80 lakh loss a year earlier. For the half year, Park Operations segment profit was Rs 3.36 crore, down from Rs 9.70 crore in the prior-year period.

Conclusion

Nicco Parks continues to operate park-related businesses and reported Rs 29.27 crore of half-year operating revenue, but the legal basis for use of key land remains unresolved. The auditor's material-uncertainty statement concerns unsigned renewal agreements after the 33-year lease expired on 28 February 2023, while a separate 1.46-acre operating arrangement also awaits formalisation.

The next development is execution of lease terms that management says have received in-principle approval, alongside the state government's decision on the repossessed F&B and recreational land. Nicco Parks has said it will make consequential accounting adjustments when that decision is determined, while the auditor has said the financial impact cannot yet be determined.