Payment of Rs18cr ‘old IT dues’ pushes CMRL into quarterly loss

Company MD Kartha gets board approval for up to six-month medical leave

CL Jose

KOCHI: The Rs18.09 crore income-tax (IT) paid under an order from the Interim Board for Settlement (of IT) has pushed the ‘infamous’ Cochin Minerals and Rutile Ltd (CMRL) into a loss of Rs6.92crore for the fourth quarter (Q4) ending March 31, being the first time in recent times.

CMRL has been in the media glare for some time now on reports pointing finger at the chief minister Pinarayi Vijayan and his daughter Veena Vijayan to have received illegitimate kickbacks running into crores from the company along with other prominent politicians too. 

CMRL had posted a profit of Rs13 crore for the fourth quarter last year. Despite the quarterly loss, the company closed the financial year FY24 with a modest net profit of Rs8.6 crore against Rs56.43 crore profit posted by the company for FY23. The shares of the company closed at Rs276.70 on BSE after gaining Rs 4 or 1.47 per cent in today’s (June 03) trading, taking the market cap up to Rs216.66 crore.

Centre of controversy

The managing director of the company, Dr SN Sasidharan Kartha has got the okay from the board of directors of CMRL to go on medical leave for a period not exceeding six months.

CMRL has been in the centre of a controversy with regard to a ‘questionable expense’ during the period between FY12 and FY19 that has been reportedly used by the company to evade income tax, and this has triggered long-drawn political mud-slinging between the ruling front and Opposition.

And more intriguingly, the claims raised by the company about these expenses have opened a Pandora’s Box with prominent names such as former late chief minister Oommen Chandy, other key politicians like Ramesh Chennithala, Kunjalikutty, chief minister and his daughter; etc. figuring on the list of those took kickbacks from the company.

CMRL’s dispute with income tax dates back to the period as early as 2012 and has led to searches on its accounts by the IT department.

Consequent to search operations under Section 132 of the Income Tax Act on January 25, 2019, the Income Tax Department re-opened the income tax assessments of the company for the financial years 2011-12 to 2018-19.

This has led to disallowing certain expenditure claimed by the company in the profit and loss account as inflationary /not relating to business, and the litigation was settled as per the Order of the Interim Board for Settlement (IT) dated June 12, 2023.

The company had to pay a sum of Rs18.09crore as income tax for the above mentioned financial years and the same has been disclosed as a separate item in the profit and loss account for the period under review – the financial year ended March 31, 2024.

However, the company has contested the re-opening of the assessment for the financial year 2011-12 before the Kerala High Court (HC) and the same is sub judice.

Financial irregularities

In the meantime, there were media reports that the Income Tax Department has informed Delhi High Court in its status report that the Registrar of Companies (ROC) has found irregularities to the tune of  Rs103 crore in the Cochin Minerals and Rutile Ltd (CMRL) during the preliminary investigation conducted in the ‘monthly quota’ charges.