Madras Day Special- Part 2: The Parry Case of Impairment

Ranganathan V 28 August 2025

Economy & Nation

It was time to pick the next spot to visit and someone in the group suggested that part of the city which shaped the contour of the history of Madras, more than perhaps any other place. It is a long distance from Santhome High Road, but the promise of a story waiting to be unwrapped justified travelling that far!

The history of Parry’s Corner may be as old as the embryonic emergence of the city itself.

This corporate story, of course, traces the history over a much shorter timeframe, maybe a couple of decades or slightly more or less. The reason for sounding a little ambivalent is the difficulty in tracing its financials beyond a certain time.

As far as one could go back in time, this entity never made any profit and continuously posted losses, with the accumulated losses often exceeding the capital.

This entity is an unlisted subsidiary of a listed entity. The holding company periodically infused capital to sustain the operations.

The earliest year to which the financial reports and the audit signoff can be traced is 2016-17. There was a change of auditors in 2016-17 but it comes out that both the past and the next auditors were dealing with this issue of continuous losses based on the management's assurances and the capital infusions, with no remarks of any sort in the audit reports.

The trend was maintained by the new auditor, PW, from 2017-18 onwards.

Two more extracts below show the continuity in the auditor not seeing any red flag on the going concern issue- the first is the note for 2020-21 and the next is for 2024-25, the latest year.

A relevant observation is that the audit reports, to date, did not carry any emphasis of matter on this point of going concern.

There is, perhaps, some logic to take the periodic oxygen supplied by the parent, together with the absence of any default in meeting the credit obligations, as a good enough basis for not upsetting the going concern assumption.

But the next question is trickier. Even if the facts justify a going concern, are they equally adequate to not recognise any impairment in the assets of the company?

Can a business that has made only losses since its inception, with sustenance being provided by the holding company, claim that its assets are not impaired?

The audit report since 2020-21 incorporates a key audit matter as below-

The audit procedures listed above make for an interesting read and the readers shall not miss them!

There is no change in the above position till the latest year. A business that has all the incidents of an archaeological site is not only treated as being alive, but it is also seen as not having lost any value on its books!

How the holding company dealt with this in its books for so long is another story of the auditor’s and the audit committee’s approach to this issue!

The entrepreneurial story of Thomas Parry, and his partner William Dare, makes for an inspiring read.

Their memory is still kept alive thanks to Parry’s Corner escaping any renaming for so many years. The iconic Dare House, a landmark, aptly carries that name for a building that has many corporate offices functioning!

Lacking clarity on where to move next, but with complete consensus of proceeding to New Woodlands for the Madras-style coffee and some bondas, the continuation of further stories around Madras’ corporates depends on something emerging between now and finishing the coffee – else, bye, bye, for now!

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Madras Day Special-Part 1: India Cement Revaluation

(Ranganathan V is a CA and CS. He has over 44 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as a senior advisor post-retirement, handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)

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