Kaarya's auditor says its reported profit is wrong
The FY26 audit found an unprovided GST liability larger than the ₹2.02 cr profit the company reported. The auditor qualified the results.
What's new
- Auditor Piyush Kothari & Associates qualified Kaarya's FY26 results.
- The qualification centres on a failure to provision for interest on ₹7.58 cr in outstanding GST liabilities.
- The audit also flagged unprovided staff gratuity and unreconciled trade balances.
Why this matters
The unprovided GST interest is larger than the reported profit itself. For a company with a market capitalisation of just ₹26 crore, the auditor is saying the core bottom-line number cannot be trusted.
What we're watching
- Whether management restates the profit figure once the GST interest is booked.
- Any board action on the auditor's separate flags for gratuity and balances.
- The regulatory response to governance gaps at a nano-cap.
The full read
Kaarya reported a net profit of ₹2.02 crore for FY26 on ₹38.89 crore in revenue. Its auditor, Piyush Kothari & Associates, qualified those numbers. The core finding: the company did not provision for interest on ₹7.58 crore in outstanding GST liabilities. The liability is larger than the profit. The audit also flagged unquantified gratuity obligations and unreconciled trade balances. For a company with a market capitalisation of just ₹26 crore, these are not rounding errors. The financial statements cannot be taken at face value. Not yet.
Questions answered
- What was the main reason the auditor qualified Kaarya's results?
- The auditor found Kaarya did not provision for interest on ₹7.58 crore in outstanding GST liabilities. This omission led to an overstatement of the reported ₹2.02 crore net profit.
- What other accounting problems did the auditor identify?
- The audit highlighted unprovided gratuity for field staff, with the liability unquantified. It also flagged unreconciled balances in trade receivables and trade payables.
- What does a qualified opinion mean for an investor?
- It means the auditor could not fully agree with the financial statements. The qualification indicates the reported earnings are unreliable and there are material accounting errors.