Auditor Disclaims Opinion on AIFL's Q2 FY2023 Results, Citing Widespread Irregularities and Liquidation
Auditor issues disclaimer on AIFL's Q2 FY2023 results due to lack of evidence, suspected fraudulent transactions, non-compliance, and ongoing liquidation. Grow House Agro acquired company assets via e-auction.
A disclaimer of opinion from the auditor, coupled with identified suspected fraudulent transactions, widespread accounting irregularities, significant non-compliance, and the company's ongoing liquidation process, severely impacts its credibility and future viability for investors. The delayed reporting also adds to the negative impact.
The auditor issued a disclaimer of opinion on the financial results due to numerous severe issues including lack of sufficient audit evidence, suspected fraudulent transactions from FY2018, non-reconciliation of various balances, failure to deposit statutory dues, non-compliance with accounting standards, and ongoing litigation. This indicates a highly distressed financial situation and significant financial irregularities.
N.K. Sarraf & Associates, the Chartered Accountants for Ashapura Intimates Fashion Limited (AIFL), issued a disclaimer of opinion on the unaudited standalone financial results for the quarter ended September 30, 2022. The auditor's report, dated June 6, 2025, highlighted significant concerns, leading to an inability to form an opinion on the financial statements. Key reasons for the disclaimer include: * Inability to obtain sufficient audit evidence for opening balances as of April 1, 2022, due to unavailability of relevant supporting documents from the previous year. * Multiple irregularities and suspected fraudulent transactions noted during the year ended March 31, 2018, based on a preliminary assessment by the Liquidator/RP during the Corporate Insolvency Resolution Process (CIRP). * Non-reconciliation of trade payables, other payables, and various other receivables as of September 30, 2022, due to a lack of confirmations from parties and necessary information. * Failure to deposit various statutory dues (PF, ESIC, GST, TDS, and Income Tax) for financial years 2017-18 through 2022-23, with no provision made for potential interest and penalties. * Concerns that various trade receivables and advances to suppliers appear fraudulent, with no balance confirmations received. * Interest-free loans extended to subsidiaries and directors in previous financial years were provided off as bad and doubtful debts in Q3 FY 2018-19, in contravention of Sections 185 and 186 of the Companies Act, 2013. * Absence of supporting data or records for closing inventory as of September 30, 2022, preventing comments on its existence, accuracy, and completeness. * Inability to comment on contravention of Sections 177 and 188 of the Companies Act, 2013, regarding related party transactions due to non-availability of documentation. * Share application money of ₹2.70 crore received in FY 2017-18 is still pending allotment, contravening Section 73 of the Companies Act, 2013, regarding deposits. * No actuarial valuation for employee benefits as required by Ind AS 19; auditors could not comment on the accuracy or adequacy of provisions. * Incomplete details regarding pending litigations, claims, or proceedings, making it impossible to assess their financial impact or adequacy of provisions. * Key financial documents, including bank statements, loan accounts, and fixed deposit schedules, were not made available for verification.
The company has been undergoing CIRP since June 28, 2019, followed by a liquidation order on October 5, 2020. An e-auction was conducted on December 21, 2024, where M/s. Grow House Agro Limited was declared the successful bidder for Asset Category 1 (NSE & BSE Listed Company) on December 23, 2024, with an Earnest Money Deposit of ₹2.13 crore. A sale certificate was issued on March 1, 2025, and a new Board of Directors was nominated. The financial statements for the quarter ended September 30, 2022, were prepared on a going concern basis, despite significant doubts about the company's ability to continue as a going concern.
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Ashapura Intimates Fashion Limited filed this with the NSE as a statutory disclosure, categorised under quarterly results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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