Saakshi Medtech review flags Rs 87.54 lakh associate loss

Saakshi Medtech and Panels Limited received a qualified conclusion on consolidated results for the half year ended September 30, 2026, after its associate’s auditor said unrecorded items would increase the associate’s loss by Rs 87.54 lakh and could not quantify the effects of unverified assets, receivables and liabilities.

Why was Saakshi Medtech’s consolidated review qualified?

Saakshi Medtech’s consolidated review was qualified because Laxmi Engineering Industries (Bhopal) Private Limited, its associate, had an auditor’s report dated November 4, 2026 containing both quantified and unquantified matters for the half year ended September 30, 2026. Saakshi Medtech’s auditor based its conclusion on that other auditor’s report for associate-related amounts.

The quantified matters were six charges or expenses that the associate had not recorded. They included Provident Fund expense of Rs 1.50 lakh for July to September 2026, State Bank of India overdraft interest of Rs 6,000, income tax and related interest of Rs 64,000 grouped under Goods and Services Tax liabilities, and September wages of Rs 1.07 lakh.

The two largest omitted items were liquidated damages of Rs 61.75 lakh deducted by customers but adjusted against retention money, and interest and penalty on delayed tax deducted at source, or TDS, of Rs 22.53 lakh shown under loans and advances. The associate auditor stated that recognising all six matters would have increased the associate’s half-year loss by Rs 87.54 lakh.

Which associate balances could not be verified or assessed?

The associate auditor could not verify inventory of Rs 18.72 crore, cash of Rs 15.03 lakh and bank balances of Rs 38,000 as at September 30, 2026. The report did not assign a further adjustment to these balances, so their effect on the associate’s financial statements could not be quantified.

Recoverability had not been established for old trade receivables of Rs 7.65 crore, loans and advances of Rs 11.76 crore, TDS receivable of Rs 54.89 lakh and debit balances of directors of Rs 14.03 lakh. The qualification does not state that these balances are irrecoverable, but says the other auditor was unable to establish recoverability.

The auditor also said interest, penalty or other liabilities had not been assessed on earlier-year Goods and Services Tax dues of Rs 2.44 crore, service tax of Rs 57.63 lakh, value-added tax and central sales tax of Rs 23.85 lakh, and TDS of Rs 17.19 lakh. It additionally cited income tax, non-deduction of TDS on salaries, unreconciled Provident Fund balances and a Shriram City Union Finance Limited loan without placing amounts on each item.

How did the associate affect Saakshi Medtech’s reported result?

Saakshi Medtech recognised a Rs 70,000 share of loss from the associate between September 24 and September 30, 2026. That amount was based on the associate’s audited financial statements and was presented as “share of profit/(loss) of associates” in the consolidated statement.

Consolidated profit for the half year ended September 30, 2026 was Rs 6.17 crore, compared with profit after tax of Rs 6.18 crore before the Rs 70,000 associate loss share. The difference reflects only the seven-day post-acquisition period, whereas the Rs 87.54 lakh potential increase identified by the associate auditor concerns the associate’s full half year.

Saakshi Medtech’s auditor said it could not determine adjustments, if any, required to the share of net loss in the associate or the carrying amount of the investment for the unquantified matters. There is no comparative consolidated result for a prior period because September 2026 was Saakshi Medtech’s first year of preparing consolidated financial statements.

What is Saakshi Medtech’s exposure to the associate investment?

Saakshi Medtech acquired 34.19% of the associate’s equity share capital and voting rights on September 24, 2026. The transaction involved acquisition of 23,77,850 associate shares in exchange for allotment of 20,10,259 Saakshi Medtech shares at an issue price of Rs 207 each, including a Rs 197 premium.

The aggregate consideration was Rs 41.61 crore, determined using a registered valuer’s report. Saakshi Medtech accounts for the associate under the equity method in accordance with Accounting Standard 23, meaning its consolidated results include its share of the associate’s profit or loss after the acquisition date.

The investment’s carrying amount included goodwill of Rs 28.42 crore, calculated as the excess of investment cost over Saakshi Medtech’s share of the associate’s equity as at September 24, 2026. The auditor did not quantify whether the unverified inventory, uncertain recoverability or unassessed statutory obligations would affect this goodwill or the wider investment carrying amount.

What did the auditor conclude on Saakshi Medtech’s statements?

Saakshi Medtech’s auditor said that, except for the quantified effects and possible effects of the unquantified associate matters, nothing had come to its attention indicating that the consolidated results for September 30, 2026 failed disclosure requirements or contained a material misstatement. The conclusion was issued on November 12, 2026.

The work was a review performed under Standard on Review Engagements 2410, rather than a full audit, and therefore provided moderate assurance. Saakshi Medtech’s audit committee recommended the results and its board approved them on November 12, 2026.

The filing separately says Saakshi Medtech’s own trade payables, loans and advances, and other current liabilities remain subject to confirmation and reconciliation. Any resulting adjustments will be accounted for in the year in which confirmation or reconciliation takes place, while the associate qualification relates specifically to the September 2026 consolidated results.

Conclusion

The qualified conclusion combines a defined potential increase of Rs 87.54 lakh in the associate’s half-year loss with unquantified questions over Rs 18.72 crore of inventory, Rs 7.65 crore of old receivables and Rs 11.76 crore of loans and advances. Saakshi Medtech’s reported Rs 70,000 associate loss covers only the period from its September 24, 2026 acquisition date to September 30.

The next disclosure to watch is whether confirmation, reconciliation or assessment leads to changes in Saakshi Medtech’s share of associate losses or investment carrying amount, including Rs 28.42 crore of goodwill. The November 12, 2026 filing leaves statutory exposure assessments, balance verification and compliance with Sections 73 to 76, 185 and 186 of the Companies Act, 2013 unresolved.