Carraro India Limited has informed stock exchanges about receiving a draft assessment order from the Income Tax Department with revised tax adjustment proposals. The development follows an initial show cause notice received earlier in February 2026.

Draft Assessment Order Details

The company received the draft assessment order dated March 3, 2026, via email on March 9, 2026, at 4:15 p.m. IST from the faceless assessment unit of the Income Tax Department. This order was issued under Section 144C(1) of the Income Tax Act, 1961, following the company's detailed responses to an initial show cause notice dated February 12, 2026.

Proposed Tax Adjustments

The draft assessment order proposes tax adjustments that have been settled downwards compared to the initial show cause notice. The Income Tax Department has cited variations to be made to the company's total income across two main categories.

The transfer pricing assessment pertains to an order dated January 22, 2026, while the corporate tax adjustments represent a significant reduction from the Rs. 27.63 crore proposed in the initial show cause notice.

Company's Response Strategy

Carraro India plans to file its intimation with the faceless assessment unit, informing them about the forum where the company will contest the proposed tax adjustments. The company will make this filing within prescribed timelines based on legal advice received.

The company has expressed confidence in receiving favorable relief from the appropriate forum where these tax adjustments will be appealed. Management emphasized that there is no immediate impact on the company's financial operations or other activities due to this draft assessment order.

Regulatory Compliance

The disclosure was made in compliance with Regulation 30 read with Para A of Part A of Schedule III of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company provided detailed information as required under the SEBI Master Circular dated November 11, 2024, ensuring full transparency with stakeholders regarding this regulatory development.

Carraro India Limited has announced a postal ballot to seek shareholder approval for material related party transactions (RPTs) with Carraro Drive Tech Italia S.p.A. (CDTI) worth ₹10,129.49 million for the financial year 2026-27. The company has issued a formal notice to shareholders dated February 27, 2026, outlining the comprehensive transaction details and voting procedures.

Transaction Overview

The proposed material RPT encompasses multiple business activities between Carraro India and CDTI, its related party within the Carraro Group. The transaction structure includes both sale and purchase components designed to support the company's manufacturing and operational requirements.

The sale of goods component includes agricultural transmissions, construction equipment transmissions, axles, gears, and allied components. Purchase activities involve ECUs, brakes, clutches, Double-U joints, switches, and various consumables required for manufacturing operations.

Historical Transaction Performance

Carraro India has maintained consistent business relationships with CDTI over recent financial periods. The company's transaction history demonstrates substantial engagement with the related party across multiple business segments.

The proposed transaction value represents 56.04% of the company's annual consolidated turnover for the immediately preceding financial year, qualifying it as a material RPT under regulatory requirements.

E-Voting Process and Timeline

The company has appointed MUFG Intime India Private Limited (formerly Link Intime India Private Limited) to provide e-voting services for all shareholders. The voting process will be conducted exclusively through electronic means, with no physical postal ballot forms being distributed.

Regulatory Compliance and Approval Structure

The Board of Directors, based on the Audit Committee's recommendation, approved the proposed transactions at their meeting held on February 11, 2026. The transactions require ordinary resolution approval from shareholders due to their material nature under SEBI Listing Regulations.

Ms. Ashwini Inamdar (Membership No. 9409) or alternatively Ms. Alifya Sapatwala (Membership No. 24091), Partners at Mehta and Mehta, Practicing Company Secretaries, have been appointed as Scrutinizers for the postal ballot process.

Related Party Details

CDTI operates as a wholly owned subsidiary of Carraro S.p.A., the ultimate parent company of Carraro India Limited. The Italian company serves as a leader in driveline business within the Carraro Group, specializing in manufacturing and selling axles, clutches, transmissions, drives, and related components.

Key personnel with interests in the transaction include Mr. Tomaso Carraro (Promoter and Non-Executive Director), who serves as Chairman and Ultimate Beneficial Owner of CDTI, along with Mr. Andrea Conchetto and Mr. Enrico Gomiero (both Non-Executive Directors), who serve as Chief Executives of CDTI.

Business Rationale and Strategic Importance

The proposed transactions support Carraro India's contract manufacturing arrangement with CDTI, wherein the company manufactures and sells axles, transmission systems, and related components. This legacy arrangement has significantly contributed to the company's revenues and foreign exchange earnings over several years.

The transactions are structured to be conducted in the ordinary course of business on an arm's length basis, with pricing determined using the Transactional Net Margin Method (TNMM) to ensure compliance with transfer pricing regulations.