Shree Cement Faces Draft Tax Demand

Shree Cement Limited has received a draft Income Tax Assessment Order for its fiscal year 2022-23, which proposes a tax demand of approximately ₹149 crore. The company stated that it plans to contest the disallowances forming the basis of this demand.

In consultation with its legal counsel, Shree Cement believes the proposed disallowances are unsustainable. The company anticipates that this tax matter will not have a significant impact on its financial or operational activities. For context, Shree Cement reported a consolidated revenue of ₹15,665 crore and a profit after tax of ₹1,279 crore for FY23.

Tax Assessment Details

The draft order was issued by the Assistant Commissioner of Income Tax, Central Circle, Ajmer, and received by the company on March 31, 2026.

Potential Implications

If the company's objections are unsuccessful, the tax demand, along with applicable interest, would need to be settled. This could involve adjustments against pending tax refunds or a direct payment, potentially affecting the company's cash flow. Any potential liability may also require a provision in Shree Cement's financial statements.

Key Risks

The primary risk for Shree Cement lies in the final outcome of its objections. Should the Income Tax Authority uphold the draft demand in its final assessment order, the company could face a financial outflow of ₹149 crore plus interest.

Industry Context

Shree Cement is a significant player in the cement industry. Its FY23 revenue of ₹15,665 crore places it alongside peers like Ambuja Cement (₹17,362 crore) and Dalmia Bharat (₹13,040 crore), although UltraTech Cement is considerably larger with ₹60,041 crore in FY23 revenue. The proposed ₹149 crore tax demand represents approximately 0.95% of Shree Cement's FY23 revenue.

What to Track Next

Investors will be closely watching the progress of Shree Cement's objections filed with the relevant tax authorities, the issuance of the final assessment order, and any subsequent legal actions the company may pursue.