Saakshi Medtech acquires 34.19% associate stake via share swap

Saakshi Medtech and Panels Limited acquired 34.19% of Laxmi Engineering Industries (Bhopal) Private Limited on September 24, 2026, through a Rs 41.61 crore non-cash share swap, making the investee an associate and creating Rs 28.42 crore of goodwill in the investment’s carrying amount.

How did Saakshi Medtech acquire the 34.19% associate stake?

Saakshi Medtech acquired 23,77,850 equity shares of Laxmi Engineering Industries (Bhopal) Private Limited on September 24, 2026, under a share-swap arrangement with its shareholders. The transaction gave Saakshi Medtech 34.19% of the entity’s equity share capital and voting rights, and Laxmi Engineering Industries (Bhopal) Private Limited became an associate from that date.

Saakshi Medtech settled the consideration by allotting 20,10,259 equity shares on a preferential basis for consideration other than cash. Each share had a face value of Rs 10 and was issued at Rs 207, including a premium of Rs 197, taking aggregate consideration to Rs 41.61 crore. The company said the consideration was determined using a registered valuer’s report.

The Rs 41.61 crore transaction is not included in Saakshi Medtech’s cash-flow statement because it was non-cash. The standalone cash-flow statement for the six months ended September 30, 2026 instead reports Rs 20 lakh of acquisition costs paid in cash and capitalised, separating those costs from the share-swap consideration.

Saakshi Medtech’s share capital rose by Rs 2.01 crore between March 31 and September 30, 2026, broadly matching the face value of the 20,10,259 shares issued. Its standalone non-current investments were Rs 41.81 crore at September 30, 2026, while total assets increased by Rs 44.63 crore over the same period.

How will Saakshi Medtech account for LEIPL?

Saakshi Medtech will account for Laxmi Engineering Industries (Bhopal) Private Limited, referred to in the company’s notes as LEIPL, as an associate using the equity method under Accounting Standard 23, Accounting for Investments in Associates in Consolidated Financial Statements. The classification applies from the September 24, 2026 acquisition date rather than from the start of the April to September reporting half year.

Saakshi Medtech recognised Rs 70,000 as its share of LEIPL’s loss for September 24 to September 30, 2026. The company said the amount was based on LEIPL’s audited financial statements for that post-acquisition period, so it does not represent LEIPL’s result for the full six months ended September 30, 2026.

The investment’s carrying amount includes Rs 28.42 crore of goodwill. Saakshi Medtech calculated this as the excess of the Rs 41.61 crore investment cost over its share in LEIPL’s equity as at September 24, 2026, meaning the recorded investment comprises both its share of underlying equity and acquisition goodwill.

September 2026 is Saakshi Medtech’s first year of preparing consolidated financial statements. The company therefore said corresponding previous-period consolidated results and a consolidated cash-flow statement were not applicable, while its standalone operations continued to be reported as one manufacturing segment under Accounting Standard 17.

What changed in Saakshi Medtech’s standalone results?

Saakshi Medtech reported standalone revenue from operations of Rs 59.51 crore for the half year ended September 30, 2026, compared with Rs 58.31 crore in the corresponding 2025 period. Total income rose to Rs 59.88 crore from Rs 58.63 crore, but profit after tax declined to Rs 6.18 crore from Rs 6.63 crore.

Employee-benefit expense increased to Rs 10.52 crore from Rs 9.27 crore a year earlier, while depreciation and amortisation rose to Rs 3.13 crore from Rs 1.87 crore. Finance cost increased to Rs 1.25 crore from Rs 25.71 lakh, and profit before tax fell to Rs 8.33 crore from Rs 8.84 crore.

Against the immediately preceding half year ended March 31, 2026, revenue increased by Rs 2.32 crore and profit after tax increased by Rs 52 lakh. Cash and cash equivalents were Rs 1.29 crore at September 30, 2026, versus Rs 1.75 crore at March 31, 2026, while long-term borrowings declined to Rs 15.46 crore from Rs 16.14 crore.

What qualifications affect LEIPL’s financial information?

The reviewer of Saakshi Medtech’s consolidated results issued a qualified conclusion because LEIPL’s auditor identified quantified and unquantified matters in the associate’s half-year financial statements. The auditor said LEIPL’s loss for the half year ended September 30, 2026 would have been Rs 87.54 lakh higher if specified expenses, charges and liabilities had been recorded.

The quantified matters included Rs 61.75 lakh of liquidated damages deducted by customers, Rs 22.53 lakh of interest and penalty on delayed tax deducted at source, Rs 1.50 lakh of provident-fund expense, and Rs 1.07 lakh of September 2026 wages. They also included Rs 64,000 of income tax and related interest and Rs 6,000 of interest on a State Bank of India overdraft.

The associate auditor was unable to verify inventory of Rs 18.72 crore, cash of Rs 15.03 lakh and bank balances of Rs 38,000. It also said recoverability had not been established for old trade receivables of Rs 7.65 crore, loans and advances of Rs 11.76 crore, tax deducted at source receivable of Rs 54.89 lakh, and directors’ debit balances of Rs 14.03 lakh.

The reviewer further cited unassessed interest, penalties or liabilities relating to earlier statutory dues, including goods and services tax of Rs 2.44 crore, service tax of Rs 57.63 lakh, value-added tax or central sales tax of Rs 23.85 lakh, and tax deducted at source of Rs 17.19 lakh. It said it could not determine any resulting adjustment to Saakshi Medtech’s share of LEIPL’s loss or the carrying amount of its investment.

Conclusion

Saakshi Medtech used shares rather than cash to obtain significant influence over LEIPL, adding a Rs 41.61 crore associate investment and Rs 28.42 crore of goodwill to its reporting framework. The acquisition also begins consolidated reporting, although the company’s standalone September 2026 half-year profit after tax was Rs 6.18 crore, below Rs 6.63 crore a year earlier.

The next disclosed matter to watch is whether LEIPL’s accounting and balance-verification issues are resolved in later financial statements. Saakshi Medtech has recognised only Rs 70,000 of associate loss for September 24 to September 30, 2026, while LEIPL’s auditor identified Rs 87.54 lakh of quantified half-year adjustments and additional matters whose effect was not determined.