Sangal Papers Limited has announced a temporary shutdown of production activities at its manufacturing facility to undertake significant expansion and machinery upgrade projects. The company filed this intimation with BSE Limited under Regulation 30 of SEBI (LODR) Regulations, 2015, providing stakeholders with advance notice of the planned operational pause.

Shutdown Timeline and Operations

The production shutdown is scheduled to commence on February 3, 2026, with operations expected to resume within 30 days of the shutdown date. This timeline positions the facility to restart operations by early March 2026, minimizing the overall impact on the company's annual production cycle.

Infrastructure Upgrades and Expansion

The temporary shutdown will facilitate major infrastructure improvements at the company's Mawana facility. The primary focus involves upgrading the turbine capacity from 3MW to 4.5MW, representing a 50% increase in power generation capability. Additionally, the company plans to upgrade other machinery components to enhance overall operational efficiency.

These upgrades are expected to strengthen the facility's production capacity and operational capabilities once operations resume. The enhanced turbine capacity will provide additional power support for expanded manufacturing activities.

Customer Impact Assessment

Sangal Papers Limited has assessed the potential impact on its supply chain and customer relationships during the shutdown period. While production activities will be temporarily halted, the company expects minimal impact on customer supply commitments. This suggests the company has likely made advance preparations to manage inventory levels and customer requirements during the shutdown period.

Facility Details

The affected facility is located at Village Bhainsa, 22-Km Stone, Meerut-Mawana Road, P.O. Sandhan, Mawana-250401, Uttar Pradesh. This facility serves as both the registered office and primary manufacturing location for the company's paper production operations.

The announcement was signed by Managing Director Himanshu Sangal and dated January 30, 2026, providing stakeholders with advance notice of the planned operational changes. The company maintains transparency with regulatory authorities and investors through timely disclosure of material developments affecting its operations.

Sangal Papers Limited has successfully appealed an Income Tax Department order, securing a favorable ruling that could result in significant tax savings. The company disclosed the receipt of an appellate order dated 28/01/2026 from the Commissioner of Income Tax (Appeals) for Assessment Year 2024-25 under Regulation 30 of SEBI Listing Regulations.

Appeal Details and Financial Impact

The original controversy centered around a disallowance of employee bonus expenses totaling Rs. 46,32,996 under section 43B of the Income Tax Act, 1961. This disallowance had resulted in a tax demand of Rs. 14,74,300 from the Central Processing Centre (CPC) of the Income Tax Department.

Legal Grounds and Company's Defense

The company's appeal was based on the timing of bonus payments to employees. While the Tax Audit Report indicated that Rs. 46,32,996 remained unpaid as of March 31, 2024, Sangal Papers contended that the entire outstanding bonus liability was discharged before the extended due date for filing the return of income on November 15, 2024.

The key legal provisions involved:

• Section 43B of the Income Tax Act allows deduction of employee bonus if paid before the return filing due date
• Section 36(1)(ii) governs deductions for employee compensation
• The proviso to Section 43B specifically permits deductions when payment is made before the statutory filing deadline

Appellate Authority's Decision

The Commissioner of Income Tax (Appeals) ruled in favor of Sangal Papers, noting that the Tax Audit Report disclosure was merely for reporting purposes and could not solely justify the disallowance. The appellate authority emphasized that subsequent payment before the statutory due date, when properly evidenced, satisfies the legal requirements.

The order specifically directs the Assessing Officer to "verify that the bonus is actually paid before the date of filing the return and allow the claim of the appellant accordingly."

Business and Financial Implications

This favorable ruling represents a positive development for Sangal Papers Limited, as indicated in their regulatory disclosure. The successful appeal could result in:

• Relief from the Rs. 14,74,300 tax demand
• Validation of the company's bonus payment practices
• Confirmation of proper compliance with employee compensation regulations

The company has characterized the impact as positive, noting that the order supports their position on the bonus payment timing and related tax treatment. This outcome demonstrates the importance of maintaining proper documentation for employee benefit payments and understanding the timing requirements under tax regulations.