Motherson Subsidiary Faces Rs 16.05 Lakh ESI Penalty for Pre-Acquisition Period

Samvardhana Motherson International Limited (SAMIL), a leading auto component manufacturer, recently disclosed that its subsidiary, Saddles International Automotive Aviation Interiors Pvt Ltd. (Saddles), has been penalized by the Employee State Insurance Corporation (ESIC) in Pune. The penalty, amounting to Rs 16.05 lakh, was imposed due to delayed deposits of employer-employee contributions for the period from September 2020 to January 2022.

Key Points of the Penalty

Subsidiary Involved: Saddles International Automotive Aviation Interiors Pvt Ltd.
Penalizing Authority: Employee State Insurance Corporation (ESIC), Pune
Penalty Amount: Rs 16.05 lakh
Period of Violation: September 2020 to January 2022
Nature of Violation: Delayed deposit of Employers Employees Contribution as per ESI Act 1950

Acquisition Context

It's important to note that the violation occurred before Saddles became a subsidiary of SAMIL. The timeline of events is as follows:

Period of Violation: September 2020 to January 2022
Acquisition Date: July 13, 2023

This chronology indicates that the issues leading to the penalty predated Saddles' association with SAMIL.

Financial Impact

Despite the substantial penalty amount, SAMIL has stated that there will be no financial impact on the company. This is because the penalty is covered by a seller indemnity, meaning the previous owners of Saddles are responsible for the financial consequences of this pre-acquisition violation.

Regulatory Compliance

This incident underscores the importance of regulatory compliance, particularly in matters related to employee benefits and statutory contributions. It serves as a reminder for companies to conduct thorough due diligence during acquisitions, especially regarding potential liabilities arising from past non-compliance issues.

Motherson's Financial Position

While this penalty does not directly impact Motherson's financials, it's worth noting the company's strong financial position. As per the latest balance sheet data:

Financial Metric	Amount (in Rs. crore)	YoY Change
Total Assets	92,847.30	+9.20%
Current Assets	43,307.90	+7.54%
Total Equity	37,128.50	+31.59%

These figures indicate that Motherson maintains a robust financial standing, which allows it to navigate such regulatory challenges effectively.

In conclusion, while the penalty on its subsidiary Saddles is noteworthy, Samvardhana Motherson International Limited's financial strength and the indemnity coverage suggest that this incident is unlikely to have a significant impact on the company's overall operations or financial health.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-1.96%	-0.04%	+4.20%	+11.10%	+1.77%	+102.96%

Samvardhana Motherson International Limited , a leading auto components manufacturer, has issued a postal ballot notice seeking shareholder approval for two significant corporate actions. The company aims to appoint a new Independent Director and revise the remuneration of a key executive.

Appointment of New Independent Director

The company proposes to appoint Mr. Dinesh Kumar Khara as an Independent Director for a term of five years, from September 25, 2025, to September 24, 2030. Mr. Khara, a distinguished career banker with 40 years of experience in the banking sector, previously served as the Chairman of the State Bank of India until August 2024.

Key points about Mr. Khara's appointment:

Brings extensive experience in banking, treasury, risk management, IT, and compliance
Holds a Master's in Business Administration and is a Post Graduate in Commerce
Appointment aims to leverage his expertise in financial markets, regulatory matters, and strategic orientation

Revision of Executive Remuneration

Samvardhana Motherson International is also seeking approval to revise the remuneration of Mr. Pankaj Mital, Whole-time Director, effective from April 1, 2025. Mr. Mital, who has been with the company for over 35 years, will be designated as President - SAMIL.

Details of the proposed remuneration revision:

Basic salary to increase to Rs. 32,74,246 per month
Annual remuneration for FY 2025-26 capped at Rs. 5,56,00,000
Eligible for employee stock options as per the company's ESOP scheme
Annual increments of up to 15% based on performance

E-Voting Process

Shareholders can participate in the decision-making process through e-voting:

Voting starts on November 22, 2025, at 0900 hours (IST)
Voting ends on December 21, 2025, at 1700 hours (IST)
Results to be declared by December 23, 2025

These corporate actions reflect Samvardhana Motherson International's efforts to strengthen its board with diverse expertise and align executive compensation with the company's growth objectives. Shareholders' participation in the e-voting process will be crucial in determining the outcome of these proposals.