3M India Limited has successfully concluded its Advance Pricing Agreement (APA) with the Central Board of Direct Taxes (CBDT), marking the resolution of long-standing transfer pricing disputes. The company announced this significant development through a regulatory disclosure to the stock exchanges on February 24, 2026.

APA Agreement Details

The multinational corporation signed and concluded the APA with CBDT on February 23, 2026, bringing closure to transfer pricing related tax litigation matters spanning nearly a decade. The agreement covers financial years from 2014-15 to 2022-23, providing clarity on the company's transfer pricing arrangements for this extended period.

Financial Impact

As a consequence of the APA conclusion, 3M India Limited has recorded a substantial tax expense of ₹170.95 crores in its Profit and Loss Account as on December 31, 2025. This expense reflects the financial settlement arising from the resolution of the transfer pricing disputes covered under the agreement.

Background and Timeline

The company had originally filed the APA application on March 28, 2018, with Indian Tax Authorities to resolve ongoing transfer pricing related tax litigation matters. In its previous disclosure dated February 12, 2026, the company had informed stakeholders that it had accepted the terms of the draft APA and expected the final agreement to be signed shortly.

Regulatory Compliance

The disclosure was made under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The announcement was communicated to both BSE Limited and National Stock Exchange of India Limited, ensuring full transparency with market participants and regulatory authorities.

3M India Limited has issued a comprehensive postal ballot notice to shareholders, seeking approval for critical corporate governance matters and significant related party transactions for the upcoming financial year.

Key Appointments and Corporate Governance

The postal ballot includes two major director appointments that will shape the company's leadership structure. The board has proposed the appointment of Mr. Dwarakanath Ranganath Mavinakere as Non-Executive Independent Director for a five-year term from February 2, 2026 to February 1, 2031. Mr. Mavinakere brings over 34 years of leadership experience across global IT services and financial services, having previously served as Chief Financial Officer of Infosys Limited until November 2018.

Simultaneously, the company seeks approval for appointing Mr. Aseem Kuldip Joshi as Managing Director for five years from April 1, 2026 to March 31, 2031. Mr. Joshi, who was appointed as President and Managing Director (Designate) effective October 13, 2025, brings over 26 years of experience across engineering, consulting, and leadership roles.

Material Related Party Transactions

The postal ballot seeks shareholder approval for substantial related party transactions totaling ₹1,309 crores for FY 2026-27. These transactions are structured across three key resolutions involving the company's parent and group entities.

Transactions with 3M Company, USA

Shareholders will vote on material related party transactions with 3M Company, USA worth ₹576 crores, covering various business activities essential for the company's operations.

A separate resolution addresses royalty payments of ₹110 crores to 3M Company, USA for FY 2026-27. The royalty arrangement, set at 3.25% on sale of manufactured goods, provides the company access to 3M Group's technologies, product portfolio, and the globally recognized 3M brand. The parent company owns 49 technology platforms and invested approximately USD 1.10 billion in Research and Development in 2024.

Transactions with 3M Innovation Singapore Pte Ltd

The third major transaction involves 3M Innovation Singapore Pte Ltd, with proposed transactions worth ₹623 crores for FY 2026-27.

E-Voting Process and Timeline

The company has established a comprehensive e-voting framework to facilitate shareholder participation. The critical dates for the postal ballot process are structured to ensure adequate time for shareholder consideration and voting.

The company has engaged KFin Technologies Limited as the e-voting service provider, with the postal ballot notice being distributed electronically to shareholders whose email addresses are registered with the company or depositories. Physical copies will not be sent, aligning with the Ministry of Corporate Affairs' digital initiative guidelines.

Business Rationale and Strategic Context

3M India's related party transactions reflect its integrated position within the global 3M ecosystem. As the flagship listed company of 3M Company, USA in India, with the parent holding 75% equity stake, these transactions enable access to specialized materials, proprietary technologies, and global supply chain efficiencies that external suppliers cannot replicate.

The company's manufacturing footprint has expanded significantly, with locally manufactured products contributing 59.40% of total sales as of March 31, 2025, compared to 52.90% in March 2014. This growth trajectory, supported by access to 3M's global technologies and brand recognition, has driven the company's profit before tax from 3.90% of sales in FY 2013-14 to 17.40% in FY 2024-25.

The proposed transactions maintain the company's strategic alignment with global 3M operations while ensuring compliance with regulatory requirements for material related party transaction approvals. All transactions are conducted on an arm's length basis following OECD Transfer Pricing Guidelines and applicable transfer pricing regulations.

Source: None/Company/INE470A01017/5dcf4392-20f0-46a3-b896-83a2ee59163b.pdf