Rathi Bars auditor flags material going-concern uncertainty

Rathi Bars Limited’s auditor said the quarter ended September 30, 2026 brought material uncertainty over its ability to continue as a going concern, citing Rs 79.76 crore of unpaid non-performing asset (NPA) cash-credit facilities, Rs 64.21 crore of unpaid TReDS-financier dues and a manufacturing suspension that continued through the period.

Why did Rathi Bars’ auditor raise going-concern uncertainty?

The auditor raised the uncertainty because Rathi Bars had unpaid bank facilities, unpaid TReDS-financier obligations and no resumed manufacturing operations at September 30, 2026. MASAR & Co., in its limited review report dated November 11, 2026, said these matters indicated material uncertainty that may cast significant doubt on Rathi Bars’ ability to continue as a going concern.

The report identified Rs 60.08 crore of Axis Bank cash-credit facilities and Rs 19.68 crore of Yes Bank facilities, totalling Rs 79.76 crore, as having been classified as NPAs in the previous quarter and remaining unpaid in the September quarter. It also cited Rs 64.21 crore outstanding to TReDS financiers, which remained unpaid and was under litigation at the reporting date.

MASAR & Co. conducted a review under Standard on Review Engagements 2410 rather than a full audit for the September 30, 2026 results. Subject to the stated observations and possible effects, it said nothing else had come to its attention suggesting that Rathi Bars’ unaudited standalone results were not prepared, in all material respects, under applicable requirements.

Why were Rathi Bars’ manufacturing operations still suspended?

Rathi Bars’ manufacturing operations remained suspended until the end of the September 30, 2026 quarter, after the board noted, approved and ratified the temporary halt on April 10, 2026. The filing attributes the suspension to income-tax search proceedings that began on December 15, 2025, GRAP Stage IV restrictions in NCR, an amendment to its Consent to Operate dated January 16, 2026, and higher power tariffs.

The Consent to Operate amendment was made by RSPCB, while the filing attributes the power-tariff increase to Jaipur Vidyut Vitran Nigam Limited. Rathi Bars did not disclose a manufacturing restart date, production target or capacity timetable in the November 11, 2026 announcement, leaving the operational status unresolved after the suspension continued through September 30.

The income statement reflected the stoppage: revenue from operations was nil for the September 2026 quarter, while total revenue was Rs 1.50 lakh, reported as other income. Rathi Bars recorded a net loss of Rs 11.3825 crore for the quarter, compared with net profit of Rs 97 lakh in the quarter ended September 30, 2025.

What asset monetisation proposal has Rathi Bars made?

Rathi Bars’ board has proposed monetising assets to repay bank dues, but the filing does not identify assets for sale, expected proceeds, potential buyers or a completion date. The auditor said the proposal may significantly affect future operations, making it part of the going-concern assessment rather than a completed funding measure.

Property, plant and equipment stood at Rs 39.433 crore at September 30, 2026, compared with Rs 40.8025 crore at March 31, 2026. The filing does not state whether that reduction was connected to the proposed monetisation, so the balance-sheet movement cannot be treated as evidence of a completed asset sale.

Total assets fell by Rs 23.9326 crore between March 31 and September 30, while equity declined by Rs 27.0004 crore. Current borrowings increased by Rs 1.9339 crore and current liabilities rose by Rs 3.0677 crore over the same period, providing the balance-sheet context for the proposed use of monetisation proceeds to repay bank dues.

What did the auditor say about Rathi Bars’ receivables provision?

MASAR & Co. said it could not determine whether further adjustment was required for trade receivables because sufficient appropriate evidence was not available to support the basis and adequacy of Rathi Bars’ provision. The company recognised a Rs 9.96 crore provision for bad and doubtful debts during the September 2026 quarter, representing 13.27% of disputed trade receivables, according to the auditor.

The auditor said the cumulative provision at September 30, 2026 represented approximately 34% of disputed trade receivables. Rathi Bars’ financial-results notes list the September-quarter provision at Rs 9.9686 crore and the June 2026-quarter provision at Rs 11.938 crore, with both amounts included within other expenses.

Trade receivables fell to Rs 65.1724 crore at September 30, 2026 from Rs 87.079 crore at March 31, a decrease of Rs 21.9066 crore. The filing does not break that change into collections, provisions, disputed balances or other movements, so it does not establish that the receivables issue has been resolved.

How did Rathi Bars’ first-half financial results change?

Rathi Bars reported a net loss of Rs 27.0005 crore for the half year ended September 30, 2026, reversing net profit of Rs 1.8119 crore in the corresponding half year ended September 30, 2025. Revenue from operations was nil in the latest first half, compared with Rs 258.4338 crore in the prior-year period, consistent with the disclosed manufacturing suspension.

Other expenses rose to Rs 10.4984 crore in the September 2026 quarter from Rs 4.1228 crore a year earlier, while the Rs 9.9686 crore bad-debt provision was included within the latest quarter’s other expenses. Finance costs were Rs 64.97 lakh in the September 2026 quarter, compared with Rs 1.8663 crore in the September 2025 quarter.

Cash and cash equivalents were Rs 2.80 lakh at both September 30, 2026 and March 31, 2026. Current borrowings were Rs 83.7742 crore at September 30, separately from the Rs 79.76 crore of unpaid NPA-classified cash-credit facilities identified in the auditor’s report.

Conclusion

Rathi Bars’ September 2026 filing combines an extended manufacturing halt, Rs 79.76 crore of unpaid NPA-classified bank facilities, Rs 64.21 crore of unpaid TReDS-financier obligations under litigation and uncertainty over receivables provisioning. The auditor’s limited review did not add a further modification beyond these observations, but it explicitly identified material uncertainty over going concern.

The next disclosed matters to watch are implementation of the proposed asset monetisation for bank-dues repayment and any manufacturing restart after the suspension that continued through September 30, 2026. The filing also leaves unresolved the Rs 64.21 crore TReDS litigation and whether the cumulative provision of approximately 34% of disputed trade receivables changes in later results.