On May 1, 2025, Styrenix Performance Materials Limited disclosed an important development under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding a penalty imposed by the Income Tax Department. The penalty relates to an order passed under Section 270A of the Income Tax Act, 1961, for the Assessment Year 2021-22.

Overview of the Penalty and Transfer Pricing Adjustment

The penalty, amounting to INR 2,99,44,341, is based on Transfer Pricing (TP) adjustments. TP adjustments occur when there are discrepancies in the pricing of inter-company transactions. These discrepancies often arise in multinational corporations and could potentially lead to higher tax liabilities. In this case, the penalty is related to TP adjustments made by the Income Tax Department for Styrenix Performance Materials in the financial year 2021-22.

Appeal Status

It is important to note that this penalty order is currently under appeal before the Income Tax Appellate Tribunal (ITAT) in Ahmedabad. The issue at hand is related to TP adjustments, which are being contested by the company. The company remains confident about the appeal’s success, citing a favorable ruling from the Gujarat High Court in a similar case for previous years.

Impact on Financials and Operations

Despite the imposed penalty, Styrenix Performance Materials does not anticipate any material impact on its financials, operations, or other activities. The penalty concerns a TP adjustment issue, and since the matter is under appeal, the company is optimistic about the outcome. As the appeal is expected to resolve favorably based on past judgments, the company has not adjusted its financial outlook or operations in response to this penalty.

Regulatory Context and Compliance

The disclosure was made in compliance with the SEBI Circular SEBI/HO/CFD/PoD2/CIR/P/0155, dated November 11, 2024, which mandates the disclosure of actions or orders passed by any regulatory, statutory, enforcement authority, or judicial body. Styrenix Performance Materials has ensured full compliance with the regulations by providing details regarding the penalty order, including the authority issuing the order, the nature of the action, and its expected impact.

This disclosure also highlights the ongoing regulatory processes that can influence the company’s financial standing and future outlook. Styrenix remains committed to transparency and will continue to update stakeholders on developments in this matter.

Conclusion

For now, Styrenix Performance Materials maintains a positive outlook on its appeal process, with minimal impact expected from the penalty. The company’s confidence stems from a history of favorable rulings, which strengthens its belief in a positive resolution. Stakeholders are advised to stay informed about further updates as the appeal progresses.

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