Simran Farms Limited
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Briefing
Simran Farms Limited — the brief
Forensic posture: Material flags. The auditor signed off clean with no flags, but related-party transactions are a serious concern — the company buys 40% of its materials from a single promoter-linked entity and has taken a new ₹1.75 Cr unsecured loan from its director with no repayment terms disclosed; contingent liabilities are absent and the balance sheet looks solvent, but earnings quality is fair and the company's operating cash flow is negative despite reported profits.
Auditor’s report (CARO 2020)
Auditor’s assessment Clean. Auditor: KHANDELWAL KAKANI & CO.. Opinion: Unqualified. Fiscal year FY24-25.
Related-party transactions
Assessment Concerning. Disclosed volume of ₹452 Cr across 29 related parties. Fiscal year FY24-25.
- Unsecured interest-free loan from director outstanding: Simran Farms has borrowed ₹175 Lakhs (₹1.75 Cr) as an unsecured loan from Whole Time Director Mr. Gurmeet Singh Bhatia with no disclosed interest rate or repayment terms — the balance was nil in the prior year, indicating a new loan taken d
- Related party entity provides collateral for bank borrowings: M/s Sumeet Construction, a KMP-related entity, has provided collateral security to secure the company's cash credit facility with HDFC Bank Ltd., creating an undisclosed contingent liability exposure for the related party.
- Large purchases from single KMP-related entity dominate supply chain: Purchases from Simran Agritech Private Limited alone totalled ₹276.65 Cr in FY25 (up from ₹108.90 Cr in FY24), representing approximately 40% of total cost of materials consumed (₹653.73 Cr) — a highly concentrated related-party supply arra
- Material sales to KMP-related entity Simran Agritech surge: Sales to Simran Agritech Private Limited jumped to ₹82.77 Cr in FY25 from ₹16.11 Cr in FY24, a >400% increase, representing a significant and rapidly growing revenue concentration with a single related party.
Contingent liabilities
Assessment Clean. Fiscal year FY24-25.
Corporate governance
Board of 6 directors, 50% independent. Statutory auditor: Khandelwal Kakani & Co.. Board remuneration: 23.6% of net profit. Fiscal year FY24-25.
“Unsecured Loans: From Directors Gurmeet Singh Bhatia 175.00 0.00”
What retail misses·The related-party web is invisible in headline news: a director loan with undefined repayment, a 42% of supply concentrated in one promoter-linked firm, and circular sales-to-purchases flow that could mask true margins or create liquidity dependency — none of this shows in profit announcements, only in footnote 1(c) of the balance sheet.
Strengths noted in disclosures: Auditor issued an unqualified opinion with zero high, material, or minor flags — no accounting or disclosure gaps on the auditor's watch. · Altman bankruptcy model places the company in the safe zone (score 5.88) — no solvency or going-concern distress. · No contingent liabilities disclosed — no hidden tax disputes, litigation, or guarantees.
Forensic signal
From the company's own filingsStrong: Valuation · Weak: Yield · Size