Bazel converts ₹2.25 cr loan to equity after auditor flags interest default
Total ₹10.32 cr exposure equals 54% of the NBFC's ₹19 cr market cap; standalone profit of ₹1.01 cr is overshadowed by asset quality risk.
— 1 earlier story on Bazel International Ltd. →What's new
- Auditors flagged non-receipt of interest on a ₹10.32 cr loan to Sagar Portfolio Services.
- Bazel converted ₹2.25 cr of that loan into an 18.62% equity stake.
- Standalone FY26 net profit of ₹1.01 cr on revenue of ₹4.83 cr.
Why this matters
For a nano-cap NBFC with a ₹19 cr market cap, a ₹10.32 cr exposure is existential. Converting part of it into equity is a recovery attempt but also signals deepening asset quality stress. The ₹1.01 cr profit is dwarfed by the risk.
What we're watching
- Whether the equity stake yields any recovery or further impairments.
- The next auditor's report on the remaining exposure.
- Any regulatory action if asset quality deteriorates further.
The full read
Bazel International's FY26 numbers are a footnote. The real story is an NBFC with a ₹19 crore market cap carrying a ₹10.32 crore loan on its books — 54% of its own market value. Auditors flagged that the borrower, Sagar Portfolio Services, stopped paying interest. Now Bazel is converting ₹2.25 crore of that loan into an 18.62% equity stake. This is not a recovery. It is an admission that the loan is distressed. For a company that just won Arur Footwear through CIRP, the balance sheet is loaded with risk. The ₹1.01 crore profit looks thin against the ₹10.32 crore hanging in the balance.
Questions answered
- Why is Bazel converting a loan to equity?
- To recover value from a distressed asset after auditors flagged non-payment of interest. The conversion gives Bazel an 18.62% stake in Sagar Portfolio Services.
- How big is the exposure relative to Bazel's size?
- The total ₹10.32 cr loan is 54% of its market cap of ₹19 cr.
- What does the conversion mean for Bazel's balance sheet?
- It reduces the loan book by ₹2.25 cr but creates an equity stake in a company that was unable to pay interest. The remaining exposure stays on the books at risk.
- What are the auditors concerned about?
- The non-receipt of interest income on the loan, indicating elevated asset quality risk. This was included as an 'Emphasis of Matter' in the audit report.
- What is Bazel's other main business activity?
- It is an NBFC that recently acquired Arur Footwear through the corporate insolvency resolution process.
Story so far
All notes on BAZELINTER →- 29 May 2026 · 1:48 PM IST Bazel converts ₹2.25 cr loan to equity after auditor flags interest default
- 1d ago Bazel International swaps ₹2.25 cr of bad debt for equity