New Delhi: Mahindra & Mahindra (M&M), a prominent player in the automotive sector, has found itself in the midst of a regulatory challenge. The automaker has been slapped with a penalty of over INR 14.3 lakh for what authorities deem as incorrect claims of input tax credit by its former subsidiary, Mahindra Vehicle Manufacturers Ltd (MVML), during the transition from the excise regime to the Goods and Services Tax (GST) framework. The penalty was handed down by the Joint Commissioner of Central Goods and Services Tax (CGST) and Central Excise, Pune-I Commissionerate.
The roots of this penalty trace back to the period of MVML’s erroneous availing of input tax credit, a mistake that has resulted in a demand for the recovery of the miscalculated credit along with interest. Following the amalgamation of MVML into M&M, the onus of addressing this penalty now falls on M&M’s shoulders.
M&M, however, maintains an optimistic outlook on the situation. The company believes that, based on its assessment, relevant legal provisions, and counsel’s guidance, an appeal could yield a favorable outcome. This perspective is reflected in the company’s regulatory filing, as it anticipates a positive resolution in the appellate process.
The penalty order, dated July 20, 2023, came to M&M’s attention on August 17, 2023. While the penalty is noteworthy, its financial impact on M&M is projected to be manageable. The automaker expresses confidence in its ability to navigate this challenge with minimal disruption to its financial standing.
In tems of financial performance, Mahindra & Mahindra Ltd (M&M) has showcased strong results for the quarter ending in June 2023 (Q1 FY24). The company’s standalone net profit stood at INR 2,773.73 crore, marking an impressive growth of 97.6% compared to INR 1,403.61 crore in the corresponding quarter of the previous year.
M&M’s robust financial performance extends to its revenue from operations as well. During the first quarter of the current financial year, the company’s standalone revenue surged by 23% to reach INR 24,368 crore, compared to INR 19,813 crore in the same period the previous year.
Further highlighting its financial prowess, M&M’s operating profit (EBITDA) for Q1 FY24 witnessed a significant uptick of 46.5%, reaching INR 3,547 crore as opposed to INR 2,421 crore in the previous year’s corresponding quarter.