India Motor Parts & Accessories presents a record of steady dividends and a simplified corporate structure, but the cash to fund those dividends increasingly comes from investment gains rather than the core business. Operating cash flow has covered barely half of operating profit over a decade, goodwill from a subsidiary amalgamation was impaired by ₹2.67 crores in FY2025, and a resolution has been proposed to set a ceiling of ₹500 crore for purchases from a promoter-linked firm.
Key findings
- Operating cash flow trails profit, and dividends depend on investment income
Major- Cumulative operating cash flow of ₹232 crore over ten years covered only 57% of cumulative operating profit of ₹406 crore. In the latest year, other income contributed 42.9% of profit before tax (₹42 crore of ₹99 crore), up from 18.26% in FY22. Return on capital employed has fallen from 6.85% in FY23 to 3.90% in the latest year. - Goodwill from the CAPL amalgamation was impaired in FY2025
Major- The company amalgamated its wholly-owned subsidiary CAPL Motor Parts Private Limited with NCLT approval on 20 December 2024 and an appointed date of 1 April 2023. Goodwill recognised on the amalgamation was impaired by ₹2.67 crores and recorded as an exceptional item in the profit and loss statement for the year ended 31 March 2025. - Executive pay has risen through re-designations, and a ₹74,000 penalty was levied for an independent director appointment lapse
Minor- Sri Mukund S Raghavan was elevated from Executive Director to Deputy Managing Director in May 2022, then to Managing Director from 5 July 2025 at a basic salary of ₹6,00,000 per month, up from ₹4,62,000. His commission ceiling was revised from 0.5% to 1% of net profits in 2021, then to 1.5% upon his appointment as Managing Director. NSE assessed a penalty of ₹74,000 because prior shareholder approval was not obtained before appointing Sri M K Surendran (aged >75) as Independent Director on 29 September 2024. - Disputed GST demand has risen to ₹0.95 crore, and capital commitments jumped to ₹4.26 crore
Minor- The company reported a contingent liability of ₹0.95 crore for a disputed GST demand as at 31 March 2026, up from ₹0.51 crore as at 31 March 2024. Capital commitments pending stood at ₹4.26 crore as at 31 March 2026, a sharp increase from ₹0.34 crore a year earlier. No provisions have been made against the disputed demand. - Statutory auditor Brahmayya & Co. has been retained since at least FY2019 with rising fees
Minor- Brahmayya & Co. signed the standalone audit report for FY2025-26 dated 8 May 2026 and also signed the reports for FY2018-19. Aggregate audit fees paid to the firm rose from ₹13.00 lakhs in FY2018-19 to ₹22.50 lakhs in FY2025-26. The Board recommended re-appointment for a second term of five years from the 68th AGM to the 73rd AGM in 2027. - The group is now a single entity with no subsidiaries, associates, or joint ventures
Clean- As of FY2025-26, the company has no subsidiary, joint venture, or associate company. The sole subsidiary, CAPL Motor Parts Private Limited, was amalgamated under a scheme sanctioned by the NCLT on 20 December 2024, with an appointed date of 1 April 2023.
What to watch
- Dividend coverage. Final dividend of ₹23 per share for FY2025-26 payable on or before 19 August 2026; observe whether standalone operating cash flow covers the ₹41.18 crore total dividend when the annual report is published.
- Auditor term. Brahmayya & Co.'s second term as statutory auditors expires at the conclusion of the 73rd AGM in 2027.
- GST demand. Resolution of the disputed GST demand of ₹0.95 crore, pending as at the FY2025-26 reporting period.
- Managing Director commission. Sri Mukund S Raghavan's appointment runs until 4 July 2030; any further revision in his commission, currently capped at 1.5% of net profits, would require fresh shareholder approval.
Bottom line: This is a disclosed and audited record with a clean group structure and a long dividend track record. The character of the risk is structural: the core business generates less cash than the profit statement suggests, and shareholder returns are sustained by investment income that now contributes nearly half of pre-tax profit. Watch whether operating cash flow catches up with the dividend commitment.