Mangalore Refinery and Petrochemicals Limited has secured a significant legal victory, receiving a favourable final order from the Customs Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, in a long-standing customs classification dispute involving imported 'Reformate'. The communication was received on 13th May 2026 at 02:10 PM, and the development was disclosed to stock exchanges on 14th May 2026 under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Background of the Customs Classification Dispute

The dispute centred on the customs classification of 'Reformate' imported by MRPL during the period October 2015 to February 2017. MRPL had classified the imported goods under CTH 27075000, while the Customs Department contended that the correct classification was CTH 27101219. Based on this reclassification, the department directed payment of differential duties and levies, resulting in a substantial total demand against the company.

The following table summarises the components of the total demand raised by the Customs Department:

During the course of investigation, the Customs Department had appropriated an amount of ₹212.53 crore deposited by MRPL under protest, adjusting it against the aforesaid differential duty and other levies.

CESTAT Rules in Favour of MRPL

MRPL filed an appeal before the Hon'ble CESTAT, Bangalore, challenging the department's order-in-original dated 16.09.2019 passed by the Commissioner of Customs, Mangaluru (Order-in-Original No. MLR-CUSTOM-000-COM-005-19-20). The tribunal, vide its Final Order No. 20625/2026, allowed MRPL's appeal with consequential relief, if any, as per law. The cross objections filed by the department (Customs Cross Objections No. 20153 of 2020) were also addressed as part of the proceedings under Customs Appeal No. 21090 of 2019.

Financial Implications for MRPL

The favourable order carries meaningful financial implications for the company, as detailed below:

MRPL is now eligible for a refund of the customs duty amounting to ₹212.53 crore paid under protest, which is expected to improve the company's cash flow position. Additionally, the contingent liability aggregating to ₹616.82 crore, which was previously reflected on the company's books, stands extinguished following the tribunal's order. MRPL has stated that it shall file a refund application under the provisions of the Customs Act, 1962, within the prescribed statutory timeline. No aberrations, non-compliances, penalties, or restrictions were identified or imposed pursuant to this communication.

Mangalore Refinery & Petroleum has received an upgraded investment outlook from Elara Capital, which has raised its target price and maintained an optimistic stance on the refinery company's prospects.

Elara Capital's Investment Recommendation

Elara Capital has issued an Accumulate rating for Mangalore Refinery and Petrochemicals with a raised target price of ₹214. This recommendation comes amid mixed operational performance that showcases both strengths and challenges in the company's recent results.

Strong Refining Margins Drive Growth

The company demonstrated robust performance in its core refining operations, with key metrics showing:

The strong GRM of approximately $13.5 per barrel emerged as a key driver behind the company's impressive EBITDA growth of 58% year-on-year, highlighting the effectiveness of the company's refining operations during the period.

Operational Challenges and Mixed Results

Despite the strong margin performance, Mangalore Refinery faced several operational headwinds that impacted overall profitability:

• Throughput decline: Approximately 9% drop in processing volumes
• PAT pressure: Decline in Profit After Tax attributed to lower inventory gains and tax impacts
• EPS upgrades: Despite challenges, earnings per share projections were revised upward

Structural Concerns and Future Outlook

Elara Capital noted that while the company has shown resilience in margin management, earnings volatility persists due to the lack of downstream integration. This structural limitation continues to expose the company to cyclical fluctuations in refining margins and limits its ability to capture value across the entire petrochemical value chain.

The brokerage's decision to raise the target price reflects confidence in the company's operational capabilities while acknowledging the inherent challenges in the refining business model without integrated downstream operations.