Manraj Housing Finance Receives Adverse Opinion Following Audit of Financial Statements

Manraj Housing Finance Receives Adverse Opinion Following Audit of Financial Statements​

Manraj Housing Finance Ltd. has faced severe scrutiny following the release of its audited financial results, which carry an adverse opinion from its statutory auditors. The audit report highlighted significant issues related to advances given to related parties and the company's inability to continue as a going concern, despite management expressing commitment to a turnaround strategy.

The Independent Auditor's Report for the year ended March 31, 2026, concluded that the financial statements do not present fairly the company's financial position or performance in accordance with generally accepted accounting principles. The Adverse Opinion was issued due to several material and pervasive weaknesses identified during the audit process.

A key finding related to financing involves a default on borrowings from Jalgaon Peoples Co-Op. Bank Ltd., which was transferred to ASREC (India) Ltd. As of February 2020, the outstanding amount from this lending institution stood at Rs. 687.03 lakhs. The auditors noted that since the transfer of the loan accounts to ASREC (India) Ltd., interest on the outstanding balance has not been provided.

The report quantified the impact of uncharged interest and penal interest on this defaulted debt. For the period from March 1, 2020, to March 31, 2024, there is uncharged interest amounting to Rs. 390.34 lakhs, with a penal interest component of Rs. 52.41 lakhs, totaling Rs. 442.75 lakhs. Further, the uncharged interest for the subsequent period (April 1, 2024, to March 31, 2026) amounts to Rs. 268.67 lakhs. Consequently, the auditors stated that the loss for the year is understated by Rs. 141.94 lakhs and the loan payable liability is understated by Rs. 711.42 lakhs.

Financial Distress and Related Party Risk​

The audit identified critical concerns regarding asset composition and governance structures within the company. More than 99% of the company's assets are comprised of advances, deposits, receivables, and other balances recoverable from related parties concerning property and rights acquisition. These related parties are reportedly under investigation by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), and the concerned assets have been attached by the ED, raising significant doubts about their recoverability.

Furthermore, approximately 65% of the company's liabilities are in the form of unsecured loans from related parties who hold a financial interest in the properties for which the aforementioned advances were granted. This entanglement creates uncertainty regarding the completeness and accuracy of the company’s liabilities.

The financial results reflect significant distress, as management has not conducted substantial operational activities for more than three years. The company incurred accumulated losses amounting to Rs. 574.96 lakhs as at the balance sheet date, leading to the erosion of net worth.

Audit Qualifications and Financial Reporting Impact​

The audit also noted various qualifying matters related to operational practices. Inventory assets, which are part of current assets, were found to be non-moving, with a carrying value of Rs. 88.71 lakhs remaining unchanged from the previous financial year. Additionally, management was found deficient in implementing the audit trail feature in its accounting software.

The Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2026 details how the company's performance shifts when adjusting for these qualifications:


The audit found that a material uncertainty exists regarding the company's ability to meet its short-term liabilities. The auditors noted that in addition to these issues, the company has not declared any dividend during the year.

Stock Price Movement​

Manraj Housing Finance Ltd. settled at ₹42.00 on Thursday, sinking 3.45% in the market close. The shares traded completely flat throughout the day, with the high and low both locked at the ₹42.00 price point.