Synopsis: Castrol India received favourable rulings on Rs. 4,131 crore tax dispute over goods movement from Maharashtra. The company confirmed the case has no financial impact currently.
During Monday’s trading session, shares of a pioneer in automotive and industrial lubricants surged nearly 6 percent on BSE, after the company announced resolving a tax dispute worth nearly Rs. 4,131 crore with the Maharashtra Sales Tax Department (MSTD).
With a market capitalisation of Rs. 22,245 crores, at 01:04 p.m., the shares of Castrol India Limited were trading in the green at Rs. 224.9 on BSE, up by nearly 2.2 percent, as against its previous closing price of Rs. 220. The stock has delivered negative returns of around 16 percent in one year, and has gained by over 5 percent in the last one month.
What’s the News
According to the latest regulatory filings with the stock exchanges, Castrol India Limited has received favourable rulings from the MVAT Tribunal regarding demand orders amounting to Rs. 4,131 crores for the period 2007- 08 to 2017-18 (10 years).
The company had earlier received tax demand notices from the Maharashtra Sales Tax Department (MSTD), which claimed that goods moved from Castrol’s plants/warehouses in Maharashtra to its Clearing and Forwarding Agents (CFAs) in other states were inter-state sales, made against pre-existing customer orders. Based on this, the department argued that Castrol owed additional tax.
However, Castrol contested these claims of MSTD, stating that no customer orders existed when the goods were dispatched. According to the company, this meant the goods movement was a stock transfer, not a sale, and that its tax practices were legally valid.
The company eventually received favourable orders from the MVAT Tribunal for all 10 years in dispute. Despite this, the MSTD appealed the rulings for 9 out of 10 years (from 2007-08 to 2015-16 and 2017-18) before a higher authority, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). For the year 2016-17, the MSTD accepted the Tribunal’s ruling and did not file an appeal. Castrol India clarified that, as of now, there are no financial implications arising from this ongoing matter.
Financials & More
Castrol India reported a marginal growth in the revenue from operations, experiencing a rise of nearly 7 percent YoY, increasing from Rs. 1,325 crores in Q4 FY24 to Rs. 1,422 crores in Q4 FY25. Similarly, during the same period, the company’s net profit improved from Rs. 216 crores to Rs. 233 crores, representing a slight increase of around 8 percent YoY.
Castrol India Limited, a leading lubricant company with a 115-year presence in India and a part of BP Group, is principally engaged in the business of manufacturing and marketing of automotive and industrial lubricants and related services serving various sectors including automotive, mining, machinery, and wind energy. The company operates three blending plants and a wide distribution network, reaching over 150,000 retail outlets nationwide.
Written by Shivani Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
