Gayatri Highways reports significant Q2 losses; auditors issue qualified conclusions on ZISL, defaults, and impairments
Gayatri Highways reported significant Q2 losses. Auditors issued qualified conclusions on ZISL write-back, loan defaults, non-provisioning of interest, and impairment of investments in subsidiaries, raising serious financial concerns.
The numerous qualified conclusions from the auditors on critical financial matters, including loan defaults, non-provisioning of interest, and significant impairment issues, indicate severe financial instability and raise substantial doubts about the accuracy of the financial statements. This will likely have a high adverse impact on investor confidence and the company's valuation.
The company reported a significant net loss and faced multiple qualified conclusions from its auditors, highlighting issues like unconfirmed loan write-backs, defaults on term loans, non-provisioning of interest, and failure to impair investments in loss-making jointly controlled entities. These issues indicate severe financial distress and potential misrepresentation of financial health.
* Gayatri Highways Limited announced its unaudited standalone and consolidated financial results for the second quarter and half year ended 30 September, 2025. The results were published in Business Standard (English) and Andhra Prabha (Telugu) on 14 November, 2025, following approval by the Board of Directors on 13 November, 2025. Financial Highlights (Standalone & Consolidated for Q2 ended 30 September 2025): Total income from operations: ₹81.80 lakhs. Net loss after tax from continuing operations: ₹(508.82) lakhs. Basic and Diluted Earnings Per Share: ₹(0.21). Auditors' Qualified Conclusions: The company wrote back Zero Interest Subordinate Loan (ZiSL) of ₹17,887.51 lakhs payable to Gayatri Projects Limited in FY2022-23, subject to confirmation. Auditors could not comment on the impact without confirmation. Defaulted on repayment of outstanding term loan of ₹3,822.65 lakhs and accumulated interest of ₹1,193.21 lakhs to IL&FS Financial Services Limited. The company only recognized interest on the defaulted principal, and auditors could not comment on additional interest/penalty due to lack of balance confirmation. Did not provide interest on the outstanding term loan of ₹3,822.65 lakhs due to IL&FS Financial Services Limited for the 3 and 6-month periods ended 30 September, 2025. This understated expenses and net loss by ₹483.74 lakhs and ₹2,748.01 lakhs respectively for these periods. Failed to fully impair investments, debentures, loans, and trade receivables totaling ₹4,378.33 lakhs to Cyberabad Expressways Limited (CEL) and ₹442.18 lakhs to Hyderabad Expressway Limited (HEL), both jointly controlled entities, despite CEL having negative net worth of ₹12,242.46 lakhs. This understated loss and overstated other equity by ₹4,820.51 lakhs. The holding company also failed to impair investments and other financial assets totalling ₹2,831.53 lakhs to CEL and ₹2,514.01 lakhs to HEL, leading to understatement of loss and overstatement of other equity by ₹4,185.38 lakhs in consolidated results. The parent did not receive audited financial statements for Indore Dewas Tollways Limited (IDTL), a material subsidiary, for the period ended 30 September, 2025. IDTL is undergoing Corporate Insolvency Resolution Process (CIRP). The parent compiled IDTL's results by adopting nil transactions for part of the period, which auditors could not confirm.
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Gayatri Highways 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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