Axel Polymers Limited has received a significant GST show cause notice from tax authorities, alleging wrongful input tax credit availment worth ₹31.57 crore. The company disclosed this development to BSE Limited under Regulation 30 of SEBI listing regulations on 04.02.2026.

Show Cause Notice Details

The notice details and timeline are as follows:

Allegations and Financial Impact

The GST authorities have made specific allegations against the company's input tax credit practices. According to the notice, Axel Polymers allegedly wrongfully availed input tax credit without the physical receipt of inward supplies of goods and further passed on such input tax credit without any actual supply of goods during the specified period.

The financial implications are substantial:

Company's Response Strategy

Axel Polymers has outlined its response approach to contest the allegations. The company is evaluating appropriate legal remedies, including the option of filing a writ petition before the jurisdictional Gujarat High Court against the notice. Company Secretary and Compliance Officer Ashish Chaudhary confirmed that expert legal counsel has been sought to pursue the matter in accordance with law.

Legal Position and Business Impact

The company maintains that the proposed demand appears contrary to CBIC Circular No. 171/03/2022-GST dated 06 July 2022, suggesting the input tax credit demand is not legally tenable or sustainable. Management has clarified that this development has no impact on routine operations and there is no immediate financial impact on the company pending the outcome of the proposed legal petition.

This notice follows previous GST-related communications, with the company having made earlier intimations dated 04.07.2024 and 24.07.2024 regarding GST matters. The company has committed to keeping the stock exchange informed about further developments in this matter.

Axel Polymers Limited has successfully completed its preferential share allotment, raising ₹11.18 crores through the issuance of equity shares to 50 investors. The Board of Directors approved the allotment on December 13, 2025, following shareholder approval and regulatory clearances.

Allotment Details

The company allotted 24,84,444 equity shares of face value ₹10 each at an issue price of ₹45 per share, including a premium of ₹35 per share. The allotment was made on a preferential basis under the public category, raising a total of ₹11,17,99,980.

This represents a reduction from the originally proposed 28,28,891 shares that were approved for ₹12.73 crores, indicating that the final allotment was made to fewer investors than initially planned.

Capital Structure Changes

Following the allotment, the company's capital structure has been significantly enhanced. The issued, subscribed, and paid-up capital increased from ₹8.52 crores to ₹11.00 crores.

Promoter Shareholding Impact

The preferential allotment has resulted in a dilution of promoter shareholding. The promoter and promoter group holding decreased from 60.28% to 46.67% of the total issued capital, while maintaining the same absolute number of shares at 51,34,240.

Investor Profile and Lock-in

The allotment was made to 50 investors under the public category, with the securities being subject to lock-in restrictions as prescribed under Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The newly allotted equity shares will rank pari passu with existing equity shares in all respects, including dividend payments and voting rights.

The successful completion of this preferential issue provides Axel Polymers with additional capital to support its business operations and growth initiatives in the polymer industry. The company had previously reported improved financial performance in Q1 FY2026, turning profitable after losses in the corresponding previous quarter.