Finolex Cables Limited has received a GST order from Uttar Pradesh tax authorities, confirming a demand of ₹22.58 lakh related to Input Tax Credit (ITC) discrepancies during the financial year 2021-22. The company disclosed this development through a regulatory filing under Regulation 30 of SEBI Listing Regulations.

GST Order Details

The Deputy Commissioner-GST, Lucknow, Uttar Pradesh issued the order, which was received by the company through email. The order confirms the demand under a Show Cause Notice that was previously issued for GST on mismatch of Input Tax Credit during FY 2021-22.

Nature of Alleged Violation

According to the GST authorities, the company allegedly took excess credit due to mismatch of Input Tax Credit with the GST Portal. This discrepancy was identified during the assessment of the company's GST filings for the financial year 2021-22.

The Show Cause Notice had originally raised questions about the ITC claimed by the company, and the recent order has now confirmed the tax department's position on the matter.

Company's Position and Impact Assessment

Finolex Cables has stated that the GST demand will have minimal impact on the company's operations. The total amount of ₹22.58 lakh represents a relatively small sum for the cable manufacturing company.

The company retains the option to file an appeal before the Appellate Authority to contest the order. This provides an avenue for Finolex Cables to present its case and seek relief from the confirmed demand.

Regulatory Compliance

The disclosure was made in compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company provided detailed information as per the requirements of SEBI Circular reference SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023.

This regulatory filing ensures transparency with stakeholders regarding any material developments that could potentially impact the company's financial position or operations.

Finolex Cables Limited has announced the provision of a corporate guarantee worth ₹39.20 crores to ICICI Bank Limited for its joint venture company's working capital requirements. The disclosure was made under Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

Corporate Guarantee Details

Finolex Cables has issued a corporate guarantee of ₹39.20 crores to ICICI Bank for its joint venture company Finolex J-Power Systems Limited (FJPSL)'s working capital facilities. The total working capital facility amounts to ₹80.00 crores, with the guarantee forming a part of this arrangement.

Joint Venture Structure and Risk Management

FJPSL operates as a joint venture where Sumitomo Electric Industries Limited holds a 51% stake while Finolex Cables maintains a 49% shareholding. The partnership involves promoter Mr. Deepak Chhabria, who serves as a Promoter of Finolex Cables Limited and Director of FJPSL, establishing the connected party relationship.

The companies have structured a comprehensive risk-sharing mechanism through a Memorandum of Understanding dated July 27, 2023. Under this arrangement:

• Both joint venture partners will bear risks on a pro-rata basis
• Risk allocation corresponds to their respective shareholdings
• Finolex Cables: 49% risk exposure
• Sumitomo Electric Industries Limited: 51% risk exposure

Transaction Framework

The corporate guarantee arrangement has been executed at arm's length basis, ensuring compliance with regulatory requirements for related party transactions. FJPSL has confirmed the risk-sharing arrangement, providing additional assurance regarding the structured approach to managing potential liabilities.

The guarantee represents a strategic financial support mechanism for the joint venture's operational requirements while maintaining proportional risk exposure aligned with ownership stakes. This structure allows FJPSL to access necessary working capital facilities while ensuring both partners share responsibilities according to their investment levels in the joint venture.