Arshiya Ltd Q1 FY25 Results: Profit Reported Amidst Auditor's Disclaimer and CIRP

Arshiya Ltd announced its unaudited standalone financial results for the quarter ended June 30, 2025, reporting a net profit of ₹36.78 lakh. The company is currently undergoing the Corporate Insolvency Resolution Process (CIRP).

Revenue from operations stood at ₹4.50 crore (₹450 lakh) and total income was ₹4.57 crore (₹457 lakh) for the quarter. Total expenses were reported at ₹4.20 crore (₹420 lakh).

Reader Takeaway: Reported profit faces auditor's disclaimer; severe operational disruption and CIRP create significant uncertainty.

What just happened

Arshiya Limited has disclosed its financial results for the first quarter of the fiscal year 2025 (ending June 30, 2025). Despite reporting a net profit of ₹36.78 lakh, the company's statutory auditor, M/s Artha & Associates, issued a 'Disclaimer of Conclusion'. This signifies that the auditors could not obtain sufficient evidence to form an opinion on the financial statements.

Why this matters

The auditor's disclaimer is a significant red flag for investors. It means the reported financial figures, including the profit, are not independently verified and may not accurately represent the company's true financial health. The ongoing CIRP and severe operational disruptions further add to the uncertainty surrounding the company's future.

The backstory

Arshiya Ltd is already under the Corporate Insolvency Resolution Process (CIRP), meaning its board is suspended and its operations are managed by a Resolution Professional, Mr. Pankaj Mahajan. The company has faced severe operational challenges, including the abrupt resignation of 50 out of 71 employees between July 30 and August 2, 2024, leaving only 9 staff members. Additionally, key sub-lease agreements have been terminated by lessors due to 'Event of Default', impacting business operations.

What changes now

With the auditor's disclaimer and the ongoing CIRP, the reported financial results offer little clarity on the company's actual performance or prospects. The situation highlights the critical challenges Arshiya faces in its resolution process and operational management.

Risks to watch

The primary risks include the lack of verifiable financial data, continued operational instability due to a skeleton staff, termination of critical business agreements, and the uncertainty inherent in the CIRP process. The inability to assess asset values and potential liabilities for financial guarantees are also significant concerns.

Auditor's specific concerns

The auditors cited limitations in data and records due to CIRP, significant loss of institutional knowledge from employee resignations, and revenue recognition without executed contracts or customer acceptance as key reasons for their disclaimer.

Context metrics (time-bound)

• Quarter Ended June 30, 2025: Net Profit/(Loss) ₹36.78 lakh, Revenue ₹450.00 lakh.
• July 26, 2024: Termination notices received for warehouse sub-lease agreements.
• July 30 - August 2, 2024: 50 out of 71 employees resigned.
• Reporting Date: 9 employees remaining.

What to track next

Investors should closely monitor the progress of the CIRP, any further disclosures regarding the company's operational status, and potential resolutions or outcomes from the insolvency proceedings. The company's ability to operate as a going concern remains heavily dependent on these factors.