ARSS Infrastructure Projects Unveils Audited Financial Results for March Quarter, Marked by Qualified Audit Opinions

ARSS Infrastructure Projects Unveils Audited Financial Results for March Quarter, Marked by Qualified Audit Opinions​

ARSS Infrastructure Projects Ltd. has released its audited standalone and consolidated financial results for the quarter and financial year ended March 31, 2026. The company's financial reports carry Qualified Opinions from the Statutory Auditor, citing non-compliance with accounting standards in several key areas, including revenue recognition, financial asset classification, and related party borrowing treatments.

Key Audit Qualifications Identified​

The Statutory Auditor issued a Qualified Opinion, citing three primary issues concerning the financial statements for the year ended March 31, 2026.

1. Non-Compliance with Ind AS 115​

The auditor noted non-compliance with Ind AS 115, 'Revenue from Contracts with Customers'. The qualification arises from the lack of relevant contract-wise records and underlying project documentation, making it impossible to ascertain or recognize the contract-wise surplus/deficit on construction contracts in compliance with the standard.

2. Improper Recognition of Arbitration Claims​

A significant qualification related to the recognition of arbitration claims as income and as Claims Receivable under Other Financial Assets. The auditor stated that these claims are subject to arbitration proceedings with uncertain outcomes, meaning their receivability is not established.

The auditor observed that:

• Under Ind AS 115 and Ind AS 109, variable consideration or financial asset recognition requires an unconditional contractual right or high probability of non-reversal, neither of which was met.
• Under Ind AS 37, such claims constitute contingent assets, which are prohibited from being recognized until the inflow of economic benefits is virtually certain.

The auditor concluded that the recognition of these arbitration claims, totaling Rs. 70,831.96 Lakhs, resulted in an overstatement of exceptional items in the Profit and Loss, other financial assets, and net worth of the company as of March 31, 2026.

3. Related Party Borrowing Misclassification​

The auditor raised concerns regarding a loan received from Ocean Capital Market Limited (Successful Resolution Applicant), a related party, classified as a "Secured Borrowing" with accrued interest of 9% per annum.

The auditor found three issues:

• No security creation documents were executed, nor was a charge registered with the Registrar of Companies.
• The approved Resolution Plan sanctioned by the NCLT does not contemplate the payment of interest on this loan.
• The requisite approvals for this transaction, including prior Audit Committee and Board/shareholder approval, were not demonstrated to the auditor.

These matters led to an incorrect classification of borrowings and an incorrect recognition of interest expense amounting to Rs. 1,122.76 Lakhs.

Financial Performance Summary (Year Ended March 31, 2026)​

The company released detailed financial statements, providing both standalone and consolidated figures for the quarter and year ended March 31, 2026.

Key Figures of Financial Results (Rs. in Lakhs)​

Balance Sheet Snapshot (Rs. in Lakhs)​

The following tables summarize the assets and liabilities as per the statements filed for March 31, 2026, compared to March 31, 2025.

Statement of Standalone Assets and Liabilities


Statement of Consolidated Assets and Liabilities

Cash Flow Highlights​

For the year ended March 31, 2026, the key cash flow activities were:

• Net Cash Inflow from Operating Activities: The standalone figure reported a Net Cash Inflow from Operating Activities of (Rs. 2,876.77 Lakhs).
• Net Cash Outflow from Investing Activities: The standalone figure reported a Net Cash Outflow from Investing Activities of Rs. 355.91 Lakhs.
• Net Cash Inflow (Outflow) from Financing Activities: The standalone figure reported a Net Cash Inflow from Financing Activities of Rs. 2,189.05 Lakhs.
• Cash and Cash Equivalents at Year End: The standalone ending balance was Rs. 1,620.10 Lakhs.

Operational Context​

The financial statements reflect the implementation of the Corporate Insolvency Resolution Process (CIRP) and the approved Resolution Plan, sanctioned by the National Company Law Tribunal (NCLT) on August 29, 2025. The Resolution Plan has necessitated complex transactions, including the reconstitution of the Board of Directors, extinguishment of erstwhile promoter equity, and the settlement/restructuring of various creditor liabilities. Consequently, the financial statements for the year ended March 31, 2026, reflect a substantially restructured balance sheet, meaning they are not strictly comparable to the previous year.