Supreme Engineering Limited, formerly known as Supreme Heatreate Pvt. Ltd., held a crucial Board of Directors meeting on January 15, 2025, to discuss and approve the financial performance for the second quarter and the half-year ending September 30, 2024. The meeting, which started at 12:30 p.m. and concluded at 12:45 p.m., was an important step for the company in terms of meeting regulatory requirements as set by the Securities Exchange Board of India (SEBI).

The main agenda item was the approval of the un-audited financial statements for the aforementioned period, as per the provisions outlined in Regulation 33 and Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The financial statements, including key assets and liabilities data, provided a detailed overview of the company’s financial condition.

Key Financial Highlights:

• Net Worth: As of September 30, 2024, the company's net worth stood at a negative INR 7,015 Lakhs. This alarming figure is the result of continuous financial losses, which have caused its liabilities to exceed its assets.
• Loan and Borrowing Issues: The company had a secured loan account that turned non-performing on August 19, 2021. Since then, it has been unable to service its debt obligations, which significantly impacted its financial stability.
• Ongoing Restructuring Plans: The company’s management continues to assert that its going concern status is not in jeopardy. They are actively working on loan restructuring, raising equity through new allotments, and exploring asset sales. However, these efforts are still in progress and have yet to yield conclusive results.

Auditor’s Report:

The external auditor, Rachna Patel & Co, issued a Limited Review Report on the unaudited financial results, emphasizing several critical issues that might impact the company's financial future:

1. Unpaid Statutory Dues: The company has failed to pay certain statutory dues such as TDS, Provident Fund (PF), and Professional Tax, which have become overdue.
2. Income Tax Filing and Audit: The company has not filed income tax returns for two financial years (FY 2019-20 and FY 2020-21). Additionally, a cost audit as per Section 148 of the Companies Act, 2013 has not been conducted.
3. Negative Cash Flow and Outstanding Receivables: There is a significant concern over the company’s liquidity, with substantial outstanding trade receivables and payables. The management is in the process of addressing this imbalance, but the consequences of these unsettled balances remain unascertained.
4. Non-Compliance with Lease Accounting: For the year ending March 31, 2024, the company had failed to properly value its lease liabilities and assets according to Ind AS 116, although these have been revalued in the current quarter.

Despite these financial challenges, management continues to explore ways to stabilize and improve performance, including strategic business partnerships, asset divestment, and alternative business plans.

The Statement of Assets and Liabilities and Cash Flow Statement as of September 30, 2024, have been disclosed, offering a comprehensive picture of the company’s financial status. The balance sheet shows a total liability of INR 9,832 Lakhs, against total assets of INR 3,634 Lakhs. The cash flow from operations, however, continues to be negative, further underscoring the financial difficulties the company is grappling with.

Future Outlook: Supreme Engineering's ability to generate positive cash flow depends heavily on the successful implementation of its ongoing restructuring plans and its efforts to improve operational efficiency. The Board of Directors is committed to finding a path forward, but stakeholders should remain cautious about the company’s financial recovery.

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