Shanthala FMCG removes CFO after Rs 7.61 crore audit finding

Shanthala FMCG Products Limited removed chief financial officer Yogish Mallya on October 31, 2026, after a forensic audit reported Rs 7.61 crore of customer cash collected during the year was not deposited into company bank accounts. Shanthala FMCG recognised the amount as recoverable from the former CFO, but recorded a full impairment because recoverability was uncertain.

Why did Shanthala FMCG remove its CFO?

Shanthala FMCG removed Yogish Mallya as chief financial officer, or CFO, effective October 31, 2026, citing misappropriation of funds during a period when he exercised control over day-to-day affairs and operational activities. The board disclosure said management tried to contact him and offered him an opportunity to be heard, but had received no response by the date of the announcement.

Shanthala FMCG appointed Ratnakar Rai as CFO from October 31, 2026, the same date as Mallya's removal. The filing says Rai, aged 59, has more than two decades of experience in liaison, accounts and finance, alongside a B.Com degree completed in April 1992 and an executive business-management programme completed between 2011 and 2013.

What did the forensic audit identify at Shanthala FMCG?

The forensic audit and investigation report dated October 9, 2026 identified Rs 7.61 crore collected in cash from customers during the year that was not deposited into Shanthala FMCG's bank accounts. The auditor said the CFO was responsible for daily financial operations and had full access and authority over the company's financial transactions and banking operations.

Shanthala FMCG recognised the Rs 7.61 crore as recoverable from the former CFO following the forensic findings and a board resolution. It then recorded an equal Rs 7.61 crore impairment loss under exceptional items in the standalone statement of profit and loss, with a corresponding allowance against the recoverable amount because the filing states that recovery is uncertain.

The disclosure also identified Rs 5.69 crore transferred during the year to two related parties without the requisite approvals of the audit committee and board. Of this amount, Rs 57.84 lakh remained outstanding as at March 31, 2026, while the filing did not name the two parties or specify the purpose of the transfers.

How did the audit finding affect Shanthala FMCG's FY2026 results?

The Rs 7.61 crore impairment moved Shanthala FMCG from a profit before tax and exceptional items of Rs 2.29 crore in the year ended March 31, 2026 to a loss before tax of Rs 5.32 crore. It reported a post-tax loss of Rs 5.89 crore for FY2026, compared with a post-tax profit of Rs 96.53 lakh in FY2025.

Revenue from operations rose to Rs 55.93 crore in FY2026 from Rs 52.75 crore in FY2025, while total income increased to Rs 56.95 crore from Rs 53.78 crore. Shanthala FMCG identifies marketing and distribution of fast-moving consumer goods, or FMCG, as its single reportable segment, and its total expenses before the exceptional impairment rose to Rs 54.66 crore from Rs 52.47 crore.

The comparison shows pre-exceptional profit before tax increased by Rs 98.05 lakh from FY2025, but the Rs 7.61 crore impairment exceeded that gain. Basic and diluted earnings per equity share changed to a loss of Rs 8.79 in FY2026 from earnings of Rs 1.44 in FY2025, on equity shares with a face value of Rs 10 each.

What did the auditor say about Shanthala FMCG's accounts?

Kale Malde & Co. issued a qualified opinion on Shanthala FMCG's standalone financial results for the year ended March 31, 2026. The audit report said that, without sufficient appropriate audit evidence on recoverability of the Rs 7.61 crore amount, the auditor could not determine whether further adjustments or disclosures were needed in the financial statements.

The qualified opinion in the signed standalone audit report differs from the October 31, 2026 board announcement and the notes to the results, both of which describe the audit opinion as unmodified. The audit report nevertheless says the auditor considered the October 9, 2026 forensic report, the board resolution, and management's information and explanations before reaching its conclusion on the recoverability matter.

Shanthala FMCG's balance sheet showed shareholders' funds of Rs 16.84 crore at March 31, 2026, down from Rs 22.73 crore a year earlier. Cash and cash equivalents rose to Rs 2.76 crore from Rs 2.17 crore, while trade receivables fell to Rs 1.69 crore from Rs 4.37 crore, but these movements do not resolve the separate uncertainty over recovery of the Rs 7.61 crore claim.

Conclusion

Shanthala FMCG's FY2026 filing combines a change in financial leadership with forensic findings on Rs 7.61 crore of customer cash not deposited into bank accounts and Rs 5.69 crore of related-party transfers made without required approvals. The full impairment of the cash-collection claim turned a pre-exceptional profit before tax of Rs 2.29 crore into a reported post-tax loss of Rs 5.89 crore.

The next disclosed matter to watch is whether Shanthala FMCG obtains evidence supporting recovery of the Rs 7.61 crore claim, as the auditor said it could not determine whether further accounting adjustments or disclosures were required. The filing also leaves Rs 57.84 lakh of related-party transfers outstanding at March 31, 2026, while Ratnakar Rai assumed the CFO role on October 31, 2026.