Linde India Limited faces a significant regulatory setback as the Securities Appellate Tribunal (SAT) has dismissed the company's appeal against a SEBI order regarding related party transactions. The tribunal's comprehensive ruling, delivered on December 5, 2025, upholds key regulatory directions that will impact the company's future transaction approvals.

SAT Order Details

Key Regulatory Violations Confirmed

The tribunal confirmed SEBI's findings regarding two primary violations by Linde India Limited:

Material Related Party Transaction Violations

The company failed to obtain shareholder approvals for material related party transactions undertaken with Praxair India Private Limited, a related party. The tribunal ruled that for testing materiality thresholds under Regulation 23(1) of LODR Regulations, all transactions with a related party during a financial year must be aggregated, not just transactions under a single contract.

Business Allocation Protocol Issues

The Business Allocation Protocol in the Joint Venture Agreement dated March 24, 2020, was deemed a related party transaction requiring minority shareholder approval. This protocol involved geographical and product allocation between Linde India and Praxair India without proper valuation or shareholder consent.

Tribunal's Comprehensive Analysis

Transaction Aggregation Ruling

The three-member tribunal, comprising Justice P.S. Dinesh Kumar (Presiding Officer), Ms. Meera Swarup (Technical Member), and Dr. Dheeraj Bhatnagar (Technical Member), unanimously ruled on the critical interpretation of materiality testing:

Business Valuation Direction Upheld

The tribunal upheld SEBI's direction requiring NSE to appoint a registered valuer to assess the business foregone and received through geographical allocation. The ruling emphasized that business allocation constitutes "transfer of profit-making apparatus" requiring proper valuation and potential shareholder approval if materiality thresholds are exceeded.

Company's Failed Arguments

Linde India's legal team, led by Senior Advocate Janak Dwarkadas, presented several arguments that the tribunal rejected:

• Single Contract Theory: The company argued that only transactions under individual contracts should be aggregated for materiality testing
• Business Judgment Rule: Claims that business allocation decisions were protected management decisions
• Valuation Impracticality: Arguments that future business valuation was impossible or unnecessary

Historical Context and Shareholder Rejection

The tribunal noted that Linde India had initially sought omnibus approval from shareholders in its 85th AGM for related party transactions with Praxair India and the joint venture company. However, public shareholders rejected this proposal, after which the company changed its interpretation of regulatory requirements.

Regulatory Impact Assessment

Management Changes Amid Regulatory Challenges

The SAT dismissal comes alongside significant management changes, with CFO Neeraj Kumar Jumrani's resignation effective February 15, 2026. The company has clarified that the CFO's departure, announced on December 4, 2025, is unrelated to the tribunal's decision, emphasizing these are separate developments.

Looking Forward

The tribunal's ruling establishes important precedents for related party transaction compliance among listed entities. Linde India must now examine next steps regarding the order's impact on its financial and operational activities. The company faces ongoing valuation exercises and potential requirements for retrospective shareholder approvals if transaction values exceed prescribed thresholds.

The comprehensive 37-page tribunal order reinforces regulatory oversight of related party transactions, particularly in cases involving complex corporate structures and international parent companies. This decision will likely influence how other listed entities structure and approve related party transactions going forward.

Linde India , a leading industrial gas company, has reported a significant 62% year-on-year increase in its standalone profit for the quarter ended September 30. The company's financial results, approved by its Board, reveal a mixed performance with strong profit growth but slower revenue expansion.

Key Financial Highlights

Profit Growth Outpaces Revenue

While Linde India's profit showed remarkable growth, its revenue from operations saw a modest increase of 1.54% compared to the same quarter last year. This suggests that the company has significantly improved its operational efficiency and cost management, leading to higher profitability despite slower top-line growth.

Segment Performance

Linde India operates in two primary segments:

1. Gases and Related Products Services
2. Project Engineering

The company's strong profit growth may be attributed to improved performance across these segments, although specific segment-wise data was not provided in the financial results.

Half-Year Performance

For the six-month period ended September 30, Linde India's profit rose to ₹2,740.85 crore from ₹2,159.23 crore in the corresponding period of the previous year, marking a 26.9% increase.

Regulatory Proceedings

The financial results disclosure includes a note about ongoing regulatory proceedings with the Securities and Exchange Board of India (SEBI) regarding related party transactions and business allocation arrangements with Praxair India Private Limited. The specifics of these proceedings were not detailed in the report.

Market Implications

The substantial profit growth demonstrated by Linde India, despite modest revenue growth, showcases the company's ability to enhance its bottom line through operational improvements and cost efficiencies. However, the slower revenue growth might raise questions about market demand and the company's ability to expand its top line in the current economic environment.

Investors and analysts may be keen to understand the factors driving the company's improved profitability and whether this trend is sustainable in the coming quarters. Additionally, the ongoing SEBI proceedings will be an area of interest for stakeholders, as the outcome could impact the company's future strategies and operations.

As the industrial gas sector plays a crucial role in various industries, Linde India's performance may also provide insights into the broader economic activities in the sectors it serves, such as healthcare, manufacturing, and energy.