Milkfood's auditor finds accounting errors behind its reported profit
Exceptional gains masked an operational decline, with the auditor flagging issues with land, vehicles, and share-based costs.
What's new with Milkfood Ltd.
- Milkfood reported a ₹44.29 cr profit, but the auditor issued a qualified opinion.
- Accounting issues include land revaluation, vehicle depreciation, and share-based expenses.
- Operations appear weak, with revenue dropping 7.8% to ₹412.93 cr.
Why this matters for Milkfood Ltd.
The bottom line is almost entirely artificial. It is propped up by one-time asset sales and contested accounting treatments.
What we're watching
- How management addresses the auditor's specific accounting concerns in the next filing.
- Any reversal in the revenue slide during the current fiscal year.
- Potential impact on the ₹160 cr market cap if the adjusted profitability becomes the new baseline.
The full read
Milkfood posted a net profit of ₹44.29 crore for FY26, but the number is not what it seems. Almost the entire profit stems from ₹70.42 crore in exceptional gains generated by selling its Moradabad plant and revaluing land. Beneath those one-offs, the underlying business is shrinking, with revenue down 7.8% to ₹412.93 crore.
Hardly a healthy picture.
More worrying is the auditor’s qualified opinion, which explicitly called out irregularities in land revaluation totaling ₹3,197 lakhs, retrospective revisions of vehicle depreciation worth ₹251 lakhs, and the classification of share-based expenses amounting to ₹318 lakhs. Once these contested entries are stripped away, the company's actual profit for the year drops to just ₹9.81 crore. For a business with a market cap of ₹160 crore, this massive disparity between reported earnings and audited reality is a significant governance concern. The financials do not describe a recovery; they describe an operation struggling to cover its basic costs without selling off its assets.