Shanthala FMCG reports Rs 5.69 crore unapproved transfers

Shanthala FMCG Products Limited disclosed that Rs 5.69 crore was transferred to two related parties in financial year (FY) 2025-26 without required Audit Committee and Board approvals, as applicable, with Rs 57.84 lakh outstanding from a subsidiary at March 31, 2026. The November 13, 2026 disclosure followed a forensic audit covering April 1, 2025 to July 31, 2026.

What related-party transfers did Shanthala FMCG disclose?

Shanthala FMCG disclosed aggregate transfers of Rs 5.69 crore to two related parties during FY 2025-26 without obtaining the requisite approvals of the Audit Committee and Board of Directors, as applicable. The company presented this amount as a finding of the forensic review, which examined the period from April 1, 2025 to July 31, 2026. Its November 13, 2026 filing did not name the two related parties or give a recipient-by-recipient split.

Of the Rs 5.69 crore aggregate, Rs 57.84 lakh remained outstanding from a subsidiary as at March 31, 2026. The filing therefore identifies an unpaid balance from one related party, but does not state the recovery status of the remaining transfers or set out terms for the subsidiary balance. It also does not specify whether the outstanding amount changed after March 31, 2026.

Which approvals were missing for the transfers?

Shanthala FMCG said the Rs 5.69 crore of FY 2025-26 transfers proceeded without the requisite Audit Committee and Board approvals, where applicable. The wording indicates that the approval requirement depended on the transaction, rather than saying each transfer followed an identical approval route. The company classified the issue in a disclosure of misappropriation of company funds based on the forensic audit findings.

The November 13, 2026 filing was made under Regulation 30 and Clause 6 of Paragraph A of Part A of Schedule III of the Securities and Exchange Board of India Listing Obligations and Disclosure Requirements Regulations, 2015. Shanthala FMCG also cited the Securities and Exchange Board of India Master Circular dated November 11, 2024, and subsequent amendments, as the basis for the prescribed disclosure details.

How do the transfers compare with the customer-cash finding?

The Rs 5.69 crore related-party transfers were lower than the Rs 7.94 crore of customer cash that Shanthala FMCG said was collected between April 1, 2025 and July 31, 2026 but was not deposited in its bank accounts. The filing treats the two amounts as separate forensic findings: one concerns related-party transfers in FY 2025-26, while the other concerns customer collections over a longer period ending July 31, 2026.

For the customer-cash matter, Shanthala FMCG recognised Rs 7.61 crore as recoverable from the former Chief Financial Officer and recognised an equivalent impairment loss under exceptional items in the statement of profit and loss for the year ended March 31, 2026. It reported a loss after tax of Rs 5.89 crore for FY 2025-26. The filing does not disclose a comparable impairment charge or recoverable amount specifically for the Rs 5.69 crore related-party transfers.

When were the discrepancies identified and who was involved?

Shanthala FMCG said director Santosh Kudva suspected discrepancies in April 2026 during a visit to the registered office. The company then undertook a forensic audit for April 1, 2025 to July 31, 2026, after which the forensic audit report established misappropriation of funds, according to the November 13, 2026 disclosure. The company had previously disclosed submission of the forensic audit report on October 12, 2026.

The filing names Yogish Mallya, the former Chief Financial Officer and key managerial personnel, as the person involved. Shanthala FMCG does not state that either of the two related parties that received the Rs 5.69 crore was owned, controlled or otherwise connected with Yogish Mallya. It separately identifies the former CFO in the context of the forensic findings and the Rs 7.61 crore recognised as recoverable.

What corrective actions has Shanthala FMCG taken?

Shanthala FMCG removed Yogish Mallya from the Chief Financial Officer position at a Board meeting on October 31, 2026, after providing him an opportunity to be heard. The company said it is actively pursuing recovery of the amount recognised as recoverable from the former CFO and that management is discussing available remedial legal measures with lawyers. The disclosure does not quantify recoveries made after March 31, 2026.

The Board noted the forensic findings and confirmed measures including preservation of records and digital evidence, reconciliation of customer collections with bank entries, and review of approval matters and related-party transactions. Shanthala FMCG also said strengthened internal financial controls and approval mechanisms would undergo independent testing. Separately, it said it had withdrawn distributorship arrangements with major vendors, as previously disclosed on May 13, 2026 and August 6, 2026.

Was the matter reported to authorities?

Shanthala FMCG said the matter had been reported to appropriate authorities. Its statutory auditors noted that the matter falls under Section 143(12) of the Companies Act, 2013, and that Form ADT-4 will be filed with the Central Government. The November 13, 2026 filing does not give a filing date for Form ADT-4 or describe any response from the Central Government.

The company disclosed Rs 7.94 crore of customer cash not deposited and Rs 5.69 crore of transfers to related parties without the requisite approvals. It further said Rs 33.57 lakh of the customer-cash amount would be recognised for the period ending September 30, 2026. The filing does not provide an updated financial statement showing that recognition or a final recovery outcome for either monetary category.

Conclusion

Shanthala FMCG’s disclosure identifies an approval-process issue involving Rs 5.69 crore transferred to two related parties during FY 2025-26, including Rs 57.84 lakh outstanding from a subsidiary at March 31, 2026. This finding accompanies the larger Rs 7.94 crore customer-cash matter, for which the company recorded Rs 7.61 crore as recoverable and an equivalent impairment loss for the year ended March 31, 2026.

The next disclosed matters to watch are Shanthala FMCG’s recovery efforts against the former CFO, its discussions with lawyers, the stated filing of Form ADT-4, and independent testing of strengthened controls. The company also said Rs 33.57 lakh would be recognised for the period ending September 30, 2026, while the filing leaves unresolved the recovery status of the related-party transfers and the subsidiary receivable.