Race Eco Chain received a demand cum show cause notice from the Principal Commissioner of Central Goods and Services Tax, Noida, on August 29, 2026. The notice concerns an input tax credit claim of ₹16,74,60,039 spanning FY2021 to June 2026.

The tax authority alleges that the company availed input tax credit from suppliers whose registrations had been cancelled by the department. The notice was issued under Section 74 and Section 74A of the Central Goods and Services Tax Act, 2017, and corresponding provisions of the Uttar Pradesh Goods and Services Tax Act, 2017. It also references Section 20 of the Integrated Goods and Services Tax Act, 2017.

Race Eco Chain disclosed the receipt of the notice to stock exchanges on August 31, 2026, noting that the document arrived on a Saturday, a non-working day for the firm. The company has not yet filed a formal response but plans to do so within 30 days of receipt.

Regulatory Context

The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Schedule III. The filing aligns with SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, which mandates detailed reporting of regulatory actions.

The notice is currently at a preliminary stage. No final determination or adjudication order has been passed by the authority. Race Eco Chain maintains that the availed input tax credit was in accordance with applicable GST provisions. The company is obtaining legal advice and intends to pursue all available remedies under the law.

What the Numbers Show

The disputed amount of ₹16,74,60,039 represents a significant contingent liability if the tax department’s position is upheld. This figure covers a multi-year period from FY2021 through June 2026, indicating a systemic review of supplier compliance rather than an isolated transaction error. The company’s management stated that there is no immediate impact on operations, though financial implications will depend on the final adjudication outcome.

Race Eco Chain Limited reported a significant improvement in profitability for the first quarter of FY27, with consolidated net profit rising 150% year-on-year to ₹103.5 lakh. The company’s consolidated revenue from operations grew 22% to ₹19,106.5 lakh in the quarter ended June 30, 2026, compared to ₹15,672.6 lakh in Q1FY26.

The results were driven by strong performance across its core segments, particularly the Recycle Division, which contributed the majority of the top-line growth. Standalone net profit also surged, increasing nearly six-fold to ₹61.0 lakh from ₹10.2 lakh in the corresponding period last year, while standalone revenue dipped slightly by 6% to ₹9,317.5 lakh.

Financial Highlights

On a standalone basis, the company reported revenue of ₹9,317.5 lakh, down from ₹9,881.4 lakh in Q1FY26. However, the bottom line saw a sharp recovery with net profit reaching ₹61.0 lakh, compared to ₹10.2 lakh previously. Finance costs remained a significant expense, totaling ₹246.6 lakh on a consolidated basis, up from ₹165.1 lakh in the prior year quarter.

What the Numbers Show

A key divergence emerged between the company’s operational earnings and its comprehensive income. While net profit rose substantially, total comprehensive income for the consolidated entity was just ₹22.3 lakh, down significantly from ₹195.7 lakh in Q1FY26. This was primarily due to a negative other comprehensive income (OCI) of ₹81.2 lakh, driven by income tax relating to items that will not be reclassified to profit or loss. This suggests that while core operations improved, valuation changes or tax adjustments on investments weighed heavily on overall equity growth.

Board Approvals and Corporate Actions

During its meeting on August 12, 2026, the Board of Directors approved several key administrative and governance decisions:

• Managing Director Re-appointment: The board re-appointed Mr. Sunil Kumar Malik as Managing Director for a three-year term commencing October 2, 2026, subject to shareholder approval. His remuneration remains unchanged from the previous term.
• Statutory Auditor: M/s. Akshay Singhla & Associates, Chartered Accountants, were appointed as Statutory Auditors for a five-year term starting from the conclusion of the 26th AGM.
• Internal Auditor: M/s. Modi Harsh & Co. was appointed as Internal Auditor for the financial year 2026-2027.
• AGM Date: The Annual General Meeting for FY26 is scheduled for September 26, 2026.

The company also noted specific transactions during the period, including the forfeiture of 19.55 lakh convertible warrants due to non-payment of the balance amount and an acquisition of additional equity shares in its subsidiary, Ganesha Recycling Chain Private Limited. Additionally, Ganesha Recycling Chain acquired a 51% stake in Shubhlaxmi Ecoplast LLP, making it a step-down subsidiary.