LOHANI LIMITED

Risk Rating: HIGH The company presents a HIGH risk profile driven by severe solvency and liquidity deterioration. As of 31 July 2025, the company is technically insolvent on a balance sheet basis, with net liabilities of £38,019 and negative shareholders' funds of £38,119. Furthermore, the near-total depletion of cash reserves down to £137, against current liabilities exceeding £84,000, raises substantial doubt about the entity's ability to continue as a going concern without external financial support.

Key Concerns - Capital Deficiency and Insolvency: The company's net assets have dramatically deteriorated from a positive £42,289 in 2022 to a negative £38,019 in 2025. Total liabilities (£110,451 including long-term loans) now significantly exceed total assets (£67,410), indicating a severe capital shortfall. - Critical Liquidity Crisis: Cash at bank has plummeted from £50,717 in 2022 to just £137 in 2025. Current liabilities (£84,649) vastly exceed current assets (£67,410), resulting in negative working capital of £17,239. The "quick ratio" is effectively zero, meaning the company cannot meet its immediate trade and tax liabilities from liquid assets. - Over-Reliance on Illiquid Stock: Of the £67,410 in current assets, £65,145 (96.6%) is tied up in stock. Given the nature of the business (retail sale of bread, cakes, and tobacco products), there is an inherent risk that this inventory may be perishable, subject to expiry, or dependent on consumer demand that may not materialize at the required margin to clear debts.

Positive Indicators - Regulatory Compliance: The company is up to date with its filing obligations. Accounts for the year ending 31 July 2025 were approved in April 2026, and confirmation statements are current, with no overdue flags. This suggests the directors are maintaining basic administrative and statutory compliance. - Long Operating History: Incorporated in 2006, the company has operated for nearly two decades. Prior to the recent downturn, the business demonstrated the ability to generate positive net assets and maintain significant cash reserves (e.g., in 2021 and 2022). - Director and Group Support: The balance sheet shows ongoing financial entanglement with the directors and group undertakings. While director loans and group balances can be a risk, they often indicate a willingness by the owners to prop up the business during cash flow squeezes. The director loan account was cleared and subsequently went overdrawn by £2,128, suggesting active, albeit potentially informal, financial management.

Due Diligence Notes - Going Concern Basis: The latest accounts are filleted, meaning the directors' report is omitted. It is imperative to verify whether the accounts were prepared on a going concern basis and, if so, what assumptions the directors made regarding the realization of stock and the continuation of creditor support. - Stock Realizability: Given that stock represents almost the entirety of current assets, an independent assessment of the stock's condition, age, and realizable value is necessary. If the stock is written down or proves unsaleable, the liquidity position becomes terminal. - Address Discrepancy: There is a notable discrepancy between the registered address listed in the overview (London, E6 1LU) and the registered office stated in the latest filed accounts (Birmingham, B33 8EU). This should be clarified to ensure legal documents are served to the correct, active address. - Bank Liabilities: The company carries substantial bank debt (£31,410 falling due within one year and £25,802 after more than one year). Investigation is required into whether these loans are subject to covenant breaches due to the negative net asset position, and whether they are personally guaranteed by the directors.