DCW Limited , a prominent chemical manufacturing company, has received a favorable appeal order from the Appellate Deputy Commissioner, Tirunelveli, significantly reducing its tax liability and penalty demands for VAT assessments from 2010-11 to 2013-14.

Substantial Reduction in Tax Liability

The appeal order has resulted in a dramatic decrease in DCW Limited's financial obligations:

• Tax Liability: Reduced from Rs. 1.82 crores to Rs. 14.65 lakhs
• Penalty Demands: Lowered from Rs. 2.01 crores to Rs. 7.33 lakhs

This reduction spans across four assessment years, providing substantial relief to the company.

Breakdown of Revised Demands

The company has provided a detailed breakdown of the revised tax and penalty demands for each assessment year:

Financial Impact and Next Steps

DCW Limited has confirmed that it will pay the accepted liability of Rs. 14.65 lakhs in tax and Rs. 7.33 lakhs in penalty. The company has already provided for these amounts in its books, ensuring minimal impact on its financial position.

The chemical manufacturer is now in the process of contacting the Commercial Tax Officer to adjust these amounts against pre-deposits made earlier. Additionally, DCW Limited is seeking refunds for the balance amount, which could potentially improve its cash position.

Timely Disclosure and Transparency

In compliance with regulatory requirements, DCW Limited promptly disclosed this development to the stock exchanges. The company explained that the slight delay in disclosure was due to the order being received on a weekend, with the review and disclosure process completed on the next working day.

This favorable outcome in the VAT appeal demonstrates DCW Limited's effective management of tax-related challenges and its commitment to transparent communication with stakeholders. The significant reduction in tax and penalty demands is likely to be viewed positively by investors and may contribute to improved financial stability for the company.

DCW Limited , a leading chemical manufacturer, has reported a significant 70% year-on-year increase in Profit After Tax (PAT) for the first quarter, despite a slight decline in revenue. The company's strategic focus on specialty chemicals and cost management has yielded positive results in a challenging market environment.

Financial Highlights

Key Developments

1. C-PVC Expansion: DCW commissioned a 20,000-ton C-PVC expansion ahead of schedule, with production beginning in July-August. This brings the company's total C-PVC capacity to 40,000 tons, with plans to reach 50,000 tons by the end of the fiscal year.

2. Solar Power Project: A 44.5 MW solar project was commissioned during the quarter, expected to meet about 25% of the Tamil Nadu unit's power requirements. This initiative has already contributed to power cost savings of approximately ₹4.50-5.00 crores in Q1.

3. Debt Reduction: Finance costs dropped to their lowest level in 32 quarters at ₹15.00 crores, reflecting the company's focus on deleveraging and improved cash flow management.

Segment Performance

• Basic Chemicals: Showed improved profitability, with EBITDA increasing to ₹11.00 crores from ₹1.00 crore in the comparative period, driven by increased caustic soda prices and lower energy costs.

• Specialty Chemicals: Now contribute a significant share of earnings, reinforcing the success of DCW's portfolio strategy.

• PVC: Experienced lower sales volumes due to increased internal consumption for C-PVC production.

Market Outlook

DCW's management expressed cautious optimism about the chemical industry's prospects. While global and domestic headwinds persist, including pricing pressures from low-cost imports, the company sees India as an attractive long-term chemical market. Government-led investments in infrastructure and housing are expected to sustain demand growth across several product categories.

Strategic Focus

1. Specialty Chemical Growth: Accelerating growth within the specialty chemical portfolio, where customer retention and pricing power remain strong.

2. Cost Optimization: Driving cost improvements in the basic chemical portfolio to enhance competitiveness and stabilize margins.

3. Balance Sheet Discipline: Maintaining a focus on deleveraging, with a target to achieve a net debt-to-EBITDA ratio of less than 0.5x by the end of the fiscal year.

DCW Limited's President, Saatvik Jain, commented, "This quarter will be a period where we complete our preparation and position ourselves for the next chapter of our growth journey. Our leaner balance sheet, enhanced specialty product mix, and ongoing efficiency gains will ensure that when we move forward, we do so from a position of strength."

As DCW navigates through market volatility and geopolitical uncertainties, the company remains committed to its growth strategy while maintaining financial discipline. The management's focus on high-margin specialty chemicals and operational efficiencies is expected to drive sustainable growth in the coming quarters.