Pasari's auditor flags going-concern risk as core rental income vanishes
The company's main revenue stream stopped in January after a court order vacated its premises. Its auditor now questions whether Pasari can survive.
— 1 earlier story on Pasari Spinning Mills Ltd. →What's new
- Pasari's rental income, its primary revenue source, was terminated in January 2026 after premises were vacated.
- Statutory auditors issued a going-concern warning, citing ongoing litigation with the Cotton Corporation of India.
- The CFO did not sign the final financial statements as required by law.
Why this matters
A going-concern qualification is the most severe warning an auditor can issue. For Pasari, it is directly tied to the loss of its only meaningful revenue. The legal dispute with the Cotton Corporation of India now threatens the company's core assets and its very existence. The unsigned financials add a layer of basic governance failure.
What we're watching
- The outcome of the litigation with the Cotton Corporation of India, which could lead to asset sales.
- Whether the company can secure new revenue after the court-ordered vacation of its premises.
- Any corrective action from the board over the CFO's failure to sign the accounts.
The full read
Pasari Spinning Mills' auditor has fired a warning flare. The statutory auditors issued a going-concern qualification for FY26, the highest level of financial distress signal. The trigger is clear: the company's rental income, its primary revenue source, was cut off in January 2026 after a court order vacated its premises in a dispute with the Cotton Corporation of India. Total income fell to ₹53.25 lakhs from ₹68.66 lakhs. While the company posted a net profit of ₹27.96 lakhs, the audit report reveals the CFO did not sign the financials as legally required. The company's future now hinges on the litigation's outcome and its ability to find a new revenue source from a standing start.
Questions answered
- Why did the auditors warn about Pasari's ability to continue?
- The auditors cited a material uncertainty due to the ongoing legal battle with the Cotton Corporation of India. The dispute threatens the company's core assets and led to the termination of its main rental income stream in January 2026.
- How significant was the revenue decline?
- Total income fell from ₹68.66 lakhs in the previous year to ₹53.25 lakhs in FY26, after the rental income, which was the primary source, stopped.
- What is the governance issue highlighted in the audit report?
- The statutory auditors noted that the company's Chief Financial Officer did not sign the final financial statements, which is a legal requirement.
- What is the status of the dispute with the Cotton Corporation of India?
- The litigation involves disputed dues and potential asset sales. A recent stay order has paused asset auctions, but the fundamental threat to the company's assets and revenue remains.
Story so far
All notes on PASARI →- 29 May 2026 · 5:37 PM IST Pasari's auditor flags going-concern risk as core rental income vanishes
- 1d ago Pasari's auditors flag going-concern doubt; CFO refused to sign results