India Glycols’ record is a study in contrasts: a clean audit trail and cash‑backed profit sit alongside a customs dispute that has already cost ₹7.50 crore, a layered offshore subsidiary structure where several entities show fully eroded net worth and zero operations, and a demerger scheme pending NCLT sanction while the company uses extended asset lives and exceptional items that shape reported earnings. The demerger now before the NCLT will reshape the group, but the legacy issues, the fully provided investments in two foreign subsidiaries, the contested duty, the shareholder dissent, travel with the listed entity.
Key findings
- A customs dispute leaves ₹33.43 crore in duty, interest and penalty upheld on appeal
Major- The DRI issued a show‑cause notice on 03.08.2022 alleging incorrect basic customs duty on denatured ethyl alcohol imports from 01.07.2017 to 01.02.2021. The Commissioner (Appeals) partially allowed the company’s appeal on 27.02.2026, upholding a demand of ₹33.43 crore as short‑paid duty plus interest and penalty while setting aside penalties of ₹41 crore and a redemption fine of ₹191.76 crore. India Glycols has paid ₹7.50 crore under protest and is filing an appeal before CESTAT, Allahabad. - The group operates through a layered offshore subsidiary structure, with several entities showing fully eroded net worth and zero operations
Minor- Four step‑down subsidiaries, Glycols International Ltd, Glycols International DMCC, Glycols International Pte Ltd, and Glycols International FZE, each reported share capital of 10 crore, reserves of ₹(1,000.00) Lakh, total assets of ₹0.00 Lakh, and nil turnover for FY2025‑26. The standalone financial statements record that the net worth of IGL CHEM International PTE Ltd and IGL CHEM International USA LLC was fully eroded, with provision for diminution created in FY2023‑24 and maintained unchanged through FY2025‑26. - Operating cash flow consistently exceeds profit, but free cash flow has been negative for six straight years
Minor- Free cash flow was negative for six consecutive years from FY21 through FY26 while PAT remained positive each year, with FY26 FCF at ₹‑47 crore and PAT at ₹293 crore. CFO exceeded PAT in five of the last six years, with the CFO/PAT ratio reaching 2.63x in FY26. The company raised ₹466.99 crore through preferential allotment of equity shares on 24th November 2025, fully utilised by 31st March 2026. - A demerger scheme is pending NCLT sanction, while the company uses extended asset lives and exceptional items that shape reported earnings
Minor- The Board initially approved a composite scheme on 4th February 2025 and decided on 16th May 2025 to exclusively focus on the demerger, with an appointed date of 1st April 2026. Certain Plant & Machinery are depreciated over useful lives of 40-48 years based on a technical evaluation, rather than the lives prescribed in Schedule II of the Companies Act. The company exercised the option under section 115BAA from A.Y. 2020‑21 onwards, resulting in a one‑time net non‑cash adjustment of ₹30.38 crore and write‑off of MAT credit entitlement of ₹159.98 crore in FY2020‑21. - Two foreign subsidiaries have fully eroded net worth and investments are fully provided
Minor- IGL CHEM International PTE Ltd, Singapore had its investment of ₹27.41 lakh fully provided for diminution in value in FY2023‑24, and the provision remained unchanged in FY2024‑25. IGL CHEM International USA LLC had its investment of ₹1.27 crore fully provided for diminution in value in FY2023‑24, and the provision remained unchanged in FY2024‑25. - Revenue recognition is routine with no customer concentration, though segment recasts reduce comparability across periods
Clean- No single external customer accounted for 10% or more of the company’s revenue in FY2025‑26, FY2024‑25, FY2023‑24, or FY2022‑23. The Bio‑fuel segment was created as a separate segment effective Q1 FY2024‑25, and its revenue no longer forms part of the Bio‑based Specialities and Performance Chemicals segment, making prior‑year segment revenue comparisons different.
What to watch
- CESTAT appeal on customs duty. The company is filing an appeal before CESTAT, Allahabad against the Order‑in‑Appeal dated 27.02.2026 upholding ₹33.43 crore in duty, interest and penalty.
- Excise duty appeal by the department. The Commissioner of CGST & Central Excise filed an appeal before the High Court of Uttarakhand on 21 July 2025 challenging a CESTAT order that set aside a ₹10.39 crore excise duty demand.
- Recovery of the impaired deposit. The ₹20.42 crore net carrying value of the IGL Finance Ltd inter‑corporate deposit is expected to be recovered from NSEL over time, as disclosed in the FY2025‑26 Annual Report.
- CARE Ratings watch. CARE Ratings placed a “Rating Watch with Developing Implications” on 6 March 2026 pending the scheme of arrangement.
Bottom line: This is a disclosed and audited record where operating cash flow covers reported profit and revenue is well spread. The weight sits in three places: a customs demand that has already drawn ₹7.50 crore in cash, a group of offshore subsidiaries with fully eroded net worth and zero operations, and a demerger scheme pending NCLT sanction while the company uses extended asset lives and exceptional items that shape reported earnings. The demerger will create two new listed entities; watch whether the legacy disputes and the eroded subsidiary investments stay with the parent or travel with the new companies.