Stovec Industries Limited has informed the stock exchange about receiving a significant income tax demand notice worth ₹4.02 crore from the Income Tax Department. The notice, received on 27th February 2026, pertains to the assessment year 2020-21 and relates to alleged tax deduction at source (TDS) non-compliance.

Tax Demand Details

The Income Tax Department has raised observations regarding the company's obligation to deduct tax at source under section 195 of the Income Tax Act, 1961. The demand specifically relates to remittances made in respect of "Acquisition of Service and Spares parts Business."

Financial Implications

The company has outlined the expected financial impact of this demand notice. The primary implications include a mandatory pre-deposit requirement of 20% of the demand amount to file an appeal, which will result in cash outflow. Additionally, the company will need to disclose this amount as contingent liability until the conclusion of the final appeal process.

Company's Response Strategy

Stovec Industries has announced its intention to contest the demand notice through proper legal channels. The company plans to file an appeal before the Appellate Authority under Section 246A of the Income Tax Act, 1961 against the demand notice within the stipulated time period.

Regulatory Compliance

The disclosure was made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company has also published this information on its official website at www.stovec.com as part of its transparency obligations to stakeholders.

Stovec Industries Limited announced its audited financial results for the year ended December 31, 2025, following the Board of Directors meeting held on February 23, 2026. The company reported mixed financial performance with revenue decline but maintained profitability and recommended a substantial dividend for shareholders.

Board Meeting Outcomes

The Board of Directors approved several key decisions during their meeting held from 5:00 p.m. to 6:50 p.m. on February 23, 2026:

Financial Performance Overview

The company's audited financial results for FY25 showed revenue contraction but sustained profitability:

Segment-wise Performance Analysis

The company operates through two primary business segments:

The Textile Machinery and Consumables segment includes perforated rotary screens, lacquer & auxiliary chemicals, digital ink, rotary screen printing machines, engraving equipment, components and spares. The Graphics Consumables segment comprises anilox rollers, rotamesh screens and rotaplate products.

Balance Sheet Position

The company maintained a strong financial position as of December 31, 2025:

Labour Code Impact and Regulatory Compliance

The company addressed the impact of new Labour Codes effective from November 21, 2025, recognizing a provision of ₹18.09 million towards past service cost on gratuity payable to employees. The audited financial results received an unmodified opinion from Price Waterhouse Chartered Accountants LLP, confirming compliance with applicable accounting standards and regulatory requirements.

Cash Flow Analysis

The cash flow statement revealed net cash used in operating activities of ₹19.29 million for FY25, compared to net cash generated of ₹161.86 million in FY24, primarily due to increased inventory levels and working capital requirements.