Shriram Finance has received positive rating actions from both ICRA Limited and CRISIL Ratings Limited following board approval for a major fundraising transaction with MUFG Bank Ltd. The company announced preferential issue of equity shares worth ₹39,617.98 crores, prompting both rating agencies to place their ratings on Watch with Positive Implications.

ICRA Rating Action

ICRA Limited has placed Shriram Finance's credit ratings on Watch with Positive Implications following the board's approval of the MUFG Bank investment. The rating action affects both the Fixed Deposit Programme and Non-Convertible Debenture Programme.

CRISIL Rating Update

CRISIL Ratings Limited has placed its rating on the long-term bank facilities and debt instruments on 'Rating Watch with Positive Implications' and reaffirmed its 'Crisil A1+' rating on short-term facilities. The rating action covers extensive debt instruments and facilities.

Transaction Structure and Financial Impact

The preferential issue involves the allotment of 471.12 million fully paid-up equity shares of face value ₹2.00 each to MUFG Bank Ltd. The transaction will result in MUFG holding a 20% stake in Shriram Finance post-equity infusion.

Company Financial Position

As of September 30, 2025, Shriram Finance maintained strong financial metrics with assets under management of ₹2,81,309 crores. Both rating agencies noted the company's comfortable capitalisation and healthy earnings profile.

Conference Call and Regulatory Approvals

Shriram Finance will hold a conference call on December 30, 2025, at 8:00 AM IST to discuss the proposed preferential issue. The transaction is subject to multiple approvals including shareholder consent through special resolution at the EGM scheduled for January 14, 2026, along with clearances from RBI, Competition Commission, and stock exchanges.

Both ICRA and CRISIL stated that their rating watches will be resolved upon conclusion of the MUFG transaction, with completion expected to positively impact the ratings. The agencies highlighted that the proposed equity infusion will significantly strengthen the company's capitalisation profile and support growth plans over the medium term.

Shriram Finance Limited has received a significant penalty order from tax authorities related to GST violations dating back to FY 2018-19. The company disclosed this development through a regulatory filing under SEBI's listing regulations on December 31, 2025.

Penalty Details and Authority

The Commercial Tax Officer, Chennai South, Tamil Nadu issued the penalty order dated December 30, 2025, imposing a penalty of ₹13,03,53,551.00 for FY 2018-19. The penalty has been levied under Section 74 of the Central Goods and Service Tax Act, 2017, read with the Tamil Nadu Goods and Service Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017.

Nature of Violations

The penalty order addresses multiple GST-related violations that occurred during FY 2018-19. These violations pertain to the erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance Limited effective April 1, 2022.

The specific violations identified include:

• Disallowance of input tax credit taken on payment of Reverse Charge Mechanism (RCM)
• Excess input tax credit claimed in GSTR-3B returns
• Issues related to credit notes issued
• GST implications on leasehold improvements

Total Financial Impact

The complete financial demand from the tax authorities extends beyond just the penalty amount. The total demand structure includes multiple components that significantly increase the overall liability.

Company's Response and Impact Assessment

Shriram Finance has indicated that there is no material impact on the company's financial, operational, or other activities from this penalty order. However, given the quantum of the amount involved, the company is exercising commercial prudence in its response approach.

The company is awaiting an opinion from its tax consultant regarding the Tamil Nadu state demand order reference number ZD331225453972B dated December 30, 2025. This suggests that the company may be considering legal or procedural options to address the penalty order.

Regulatory Compliance and Disclosure

The disclosure was made pursuant to Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The company received the order on December 30, 2025, and the copy was forwarded to the concerned officer on December 31, 2025, prompting the immediate regulatory disclosure.

This development highlights the ongoing scrutiny of GST compliance by tax authorities and the potential financial implications for companies, even for violations dating back several years. The case also demonstrates how corporate restructuring activities, such as amalgamations, can bring forward historical tax liabilities to the surviving entity.