ZF Commercial Vehicle Control Systems India Ltd has issued an important clarification regarding the recent sale of its ADAS (Advanced Driver Assistance Systems) business to Harman International. The company sought to address any potential confusion about the scope and impact of this strategic transaction.

Transaction Scope and Business Impact

The sale to Harman International has a limited scope, affecting only the passenger car ADAS division of the company. This clarification is significant as it delineates the boundaries of the transaction and reassures stakeholders about the continuity of other business operations.

Commercial Vehicle Operations Remain Intact

The company emphasized that its commercial vehicle operations will continue unchanged despite the ADAS business sale. This distinction is crucial for stakeholders and customers who rely on ZF Commercial Vehicle Control Systems' commercial vehicle solutions and services.

Customer Service Continuity

ZF Commercial Vehicle Control Systems has assured that customer contracts and support services will continue without any interruption. This commitment demonstrates the company's focus on maintaining strong customer relationships and ensuring seamless service delivery during the transition period.

The clarification provides transparency about the transaction's limited scope and reinforces the company's commitment to its commercial vehicle business segment and existing customer base.

ZF Commercial Vehicle Control Systems India Limited has disclosed receiving a significant CGST demand order from tax authorities, marking a regulatory development that requires investor attention under market disclosure norms.

CGST Demand Order Details

The Additional Commissioner, CGST Central Excise, Ranchi issued the order, imposing substantial financial demands on the company. The order centers on alleged incorrect classification of electronic control units for anti-lock braking systems supplied by ZF Commercial Vehicle Control Systems India.

Nature of Tax Dispute

The CGST order specifically addresses differential GST demands arising from alleged incorrect classification of electronic control units for anti-lock braking systems. This classification dispute represents a technical interpretation issue regarding the appropriate GST rate applicable to the company's automotive component products.

The demand amount of ₹39,83,65,328 reflects the differential tax liability calculated by the authorities, with an equal penalty amount imposed under the applicable GST provisions.

Company Response and Impact Assessment

ZF Commercial Vehicle Control Systems India has indicated minimal operational disruption from this development. The company's management has assessed the situation and determined there is no material impact on financial, operational, or other business activities.

Key company positions include:

• No material impact on current financial operations
• Business activities continue without disruption
• Legal recourse through appellate process planned
• Regulatory compliance maintained throughout

Regulatory Compliance and Next Steps

The disclosure was made pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency with stakeholders. ZF Commercial Vehicle Control Systems India plans to file an appeal against the CGST order, indicating the company disputes the tax authorities' interpretation.

This development highlights ongoing GST classification challenges faced by automotive component manufacturers, particularly regarding technical products like electronic control systems for vehicle safety applications.