Popular Vehicles & Services Limited has informed stock exchanges about a regulatory action taken against its subsidiary company regarding GST compliance. The disclosure was made under Regulation 30 of SEBI listing requirements.

GST Demand Details

Popular Vehicles & Services disclosed that its subsidiary Prabal Motors Private Limited received a GST demand of ₹1.01 crores for alleged excess Input Tax Credit claims during FY2021-22, along with a penalty of ₹10.08 lakhs. The action was initiated by Mr. Karthikeyan S., Assistant Commissioner, Coimbatore-IV Division.

Nature of Alleged Violation

The department has claimed that Prabal Motors Private Limited had claimed excess Input Tax Credit (ITC) during FY2021-22. The total amount of alleged excess ITC claimed stands at ₹1,00,83,198. This forms the basis for the tax demand raised by the GST authorities.

Financial Impact Assessment

According to the company's disclosure, the financial impact on Popular Vehicles and Services Limited is limited to the amounts specified in the demand order. The company has stated that there is no additional financial impact on the parent company beyond:

• Tax demand of ₹1,00,83,198
• Applicable interest until the date of actual payment
• Penalty of ₹10,08,020

Regulatory Compliance

The disclosure was made in compliance with Regulation 30 read with Clause 20 of Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This regulation mandates listed companies to disclose material events that could impact their operations or financial position.

The company has informed both BSE and NSE about this development, ensuring transparency with stakeholders and regulatory compliance.

Popular Vehicles & Services Limited , a prominent player in the automotive retail sector, has announced the extension of a corporate guarantee amounting to Rs 30 crores in favor of Axis Bank Limited. This guarantee is to support the inventory funding requirements of its subsidiary, Prabal Motors Private Limited.

Breakdown of the Corporate Guarantee

The corporate guarantee is structured as follows:

Impact on Financial Disclosures

This move by Popular Vehicles & Services Limited is significant as it affects the parent company's financial disclosures while simultaneously supporting the working capital needs of its subsidiary. The guarantee is primarily aimed at facilitating Prabal Motors Private Limited's automotive business operations.

Strategic Implications

1. Subsidiary Support: The guarantee demonstrates Popular Vehicles & Services' commitment to supporting its subsidiary's growth and operational needs.

2. Working Capital Management: By securing this funding, Prabal Motors can better manage its inventory, potentially leading to improved operational efficiency.

3. Financial Flexibility: The guarantee provides Prabal Motors with enhanced financial flexibility, allowing it to maintain optimal inventory levels for both vehicles and spare parts.

Regulatory Compliance

Popular Vehicles & Services Limited has made this disclosure in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This transparency ensures that shareholders and the market are informed about significant financial commitments made by the company.

Market Outlook

While the immediate impact on Popular Vehicles & Services Limited is limited to the disclosure in its financial statements, this move could be seen as a positive indicator of the company's confidence in its subsidiary's business prospects and the overall automotive market conditions.

As the automotive sector continues to evolve, such strategic financial support could play a crucial role in maintaining competitiveness and ensuring smooth operations across the group's various business units.