Syngene International has secured a significant legal victory in its ongoing tax litigation, with the High Court of Karnataka passing a favorable order on December 17. The pharmaceutical services company announced this development through a regulatory filing dated December 30.

Court Order Details

The High Court of Karnataka has allowed the writ petition filed by Syngene International against income tax authorities. The case pertained to issues related to assessment years 2010-11, 2011-12, and 2012-13, involving a substantial refund amount.

Background of the Dispute

The company had filed the writ petition against specific actions by income tax authorities. The dispute centered around two main issues:

• Adjustment of refund granted for assessment years 2010-11 and 2011-12 against demand outstanding for other years
• Non-issuance of refund granted for assessment year 2012-13

The total amount involved in this tax litigation aggregated to ₹48,90,84,008.

Court's Direction

The High Court has provided clear directions to resolve the matter in favor of Syngene International. The court has directed income tax authorities to refund the amount along with interest, subject to verification. Notably, no penalties, restrictions, or sanctions have been imposed in the current order.

Financial Impact Assessment

Syngene International has stated that it believes there may not be any material impact on the company's financials, operations, or activities as a result of this favorable order.

Next Steps

The company is currently analyzing the court order and will take appropriate action as required. This development represents an update to the company's previous intimation dated October 16, regarding the filing of the writ petition before the High Court of Karnataka.

The favorable court ruling strengthens Syngene International's position in this tax matter and provides clarity on the refund process for the specified assessment years.

Syngene International has announced a strategic investment of ₹35.00 crore in O2 Renewable Energy V Private Limited (O2REV) to strengthen its renewable energy portfolio and secure sustainable power sourcing for its operations.

Investment Structure and Stake Acquisition

The pharmaceutical services company will acquire an 8.23% equity stake in O2REV through the purchase of shares from Dalmia Cement (Bharat) Limited. The transaction will be executed through cash consideration in one or more tranches, with completion scheduled on or before March 31, 2026, or such other date mutually agreed between the parties.

Target Company Profile and Operations

O2 Renewable Energy V Private Limited, incorporated on May 25, 2022, operates renewable energy generation facilities in Karnataka. The company is engaged in power generation through wind-solar hybrid infrastructure located at Kudligi, Bellary District, Karnataka.

Financial Performance of O2REV

The target entity has demonstrated consistent revenue performance over its operational period. The company's financial data shows substantial turnover across recent years.

Strategic Rationale and Captive Status

This investment aligns with Syngene International's objective to enhance renewable-based power consumption for its operations. The company, along with other captive investors, will acquire and maintain a minimum 26% stake in O2REV throughout the term of the Power Purchase Agreement to maintain captive status as per the Electricity Act and Share Purchase Agreement.

The investment represents a strategic shift from Syngene's earlier plan involving O2 Renewable Energy II Private Limited. The company cited regulatory changes affecting solar power utilization and longer time needed to set up infrastructure for wind energy in O2REII as reasons for this transition to O2REV, which has existing wind assets.

Regulatory Compliance

The transaction falls under the purview of SEBI Listing Regulations, and Syngene International has provided comprehensive disclosure as required under Regulation 30 read with Schedule III of the SEBI Listing Regulations. The investment does not require any governmental or regulatory approvals for completion, and the transaction is structured as a non-related party transaction.