Finolex Cables Limited , a prominent player in the Indian cable industry, has received a GST order demanding Rs 41.19 lakh for an alleged Input Tax Credit (ITC) mismatch. This development highlights the ongoing scrutiny of tax compliance in the corporate sector.

Order Details

The Assistant Commissioner, Central Tax, Division-II (Pimpri), Pune-I Commissionerate issued an Order-in-Original to Finolex Cables on October 16, 2025. The order partially confirms a demand under a Show Cause Notice, citing discrepancies in the company's Input Tax Credit claims.

The total demand of Rs 41.19 lakh is broken down as follows:

Alleged Violation

The tax authorities allege that Finolex Cables claimed excess Input Tax Credit compared to the amounts reflected on the GST portal. This mismatch led to the issuance of the demand order.

Company's Response

Finolex Cables has acknowledged the receipt of the order through an email on October 16, 2025. The company has stated that it has the option to file an appeal with the Appellate Authority against this order.

Financial Impact

In its communication to the stock exchanges, Finolex Cables has asserted that the tax demand of Rs 41.19 lakh is not expected to have a significant impact on the company's operations.

Regulatory Compliance

The company has informed the stock exchanges about this development, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Conclusion

While the GST demand poses a compliance challenge for Finolex Cables, the company's prompt disclosure and stated minimal operational impact indicate its approach to addressing regulatory matters. Stakeholders may monitor how the company addresses this tax issue and any potential appeal process that may follow.

Finolex Cables Limited , a leading manufacturer of electrical and telecommunication cables, reported a 13% year-over-year increase in revenue, reaching INR 1,400.00 crore for the first quarter. The company's profit after tax also grew by 13% compared to the same period last year.

Strong Performance in Electrical Segment

The electrical segment drove the company's performance, with a notable 16% volume growth. This growth was primarily attributed to increased sales in power cables rather than wires. However, the company faced challenges in various areas:

• Agricultural Wire Demand: Unseasonal rains starting in mid-May negatively impacted the demand for agricultural wires.
• Communication Cable Volumes: The communication cable segment experienced depressed volumes and values due to delayed contract closures with customers.
• FMEG Revenues: The lighting segment faced price erosion, affecting revenues from Fast-Moving Electrical Goods (FMEG).

Margin Pressures and Product Mix Shift

Despite the revenue growth, Finolex Cables experienced margin pressures due to a shift in product mix. The company's Deputy CEO and CFO, Mr. Mahesh Viswanathan, explained:

"There is more of sales towards project and those are at discounted prices. The discounts are fairly deep. You get volumes, you get cost efficiency in the plant, but then at the end of the day, the margins are definitely lower, and they are lower by about 4-5 percentage points."

The company aims to achieve segment margins of around 12% but acknowledged that it might take a couple of quarters to reach this target.

Capex Plans and Future Outlook

Finolex Cables announced a capital expenditure plan of INR 300.00 crore for the current fiscal year. Key highlights include:

• E-beam Facility: The company has completed its E-beam facility for electrical cables, with products available since March.
• Optical Fiber Business: A significant portion of the capex (INR 325.00-350.00 crore) is allocated to the fiber business, including a preform facility that is awaiting final trials.
• Electrical Cable Segment: The company plans to invest INR 60.00-80.00 crore in replacement and productivity improvements for the electrical cable segment.

Market Challenges and Opportunities

Finolex Cables faces several market challenges, including:

• Price Erosion in Lighting: The lighting sector has experienced significant price erosion, affecting the FMEG segment's top line.
• Government Project Delays: The communication cable segment continues to face challenges due to slow execution of government programs like the National Optical Fibre Network.
• Competition in Wires Segment: The company acknowledged underperformance compared to industry peers, particularly in the wires segment, over the past 4-5 years.

Looking ahead, Finolex Cables expects growth to pick up, particularly in the real estate sector, which could drive demand for wires and cables. Mr. Viswanathan stated, "I think that should be the time that we should also see growth picking up, maybe by third quarter this year, and it should continue at least for a few quarters, 4 to 6 quarters for sure."

The company remains focused on improving its product mix, expanding its retail footprint, and introducing new product offerings to drive growth in the FMEG segment. Additionally, Finolex Cables is exploring opportunities in the growing data center market, which could potentially boost demand for both power and data cables in the future.

As Finolex Cables navigates these challenges and opportunities, investors and industry observers will be closely watching the company's ability to improve margins and capitalize on emerging market trends in the coming quarters.