Samvardhana Motherson Faces ₹3.7 Million Penalty Over Argentina VAT Dispute

Image Source: Business Standard

Samvardhana Motherson’s Argentina subsidiary, Motherson SAS Automotive Modules and Services, has been fined ₹3.7 million by ARCA for VAT compliance issues. The penalty relates to claims made between 2019 and 2023, prior to Motherson’s acquisition. The company asserts no material financial impact and seeks indemnity from the seller.

Penalty imposed by Argentine tax authority

Samvardhana Motherson International Ltd (SAMIL) confirmed that its indirect subsidiary in Argentina, Motherson SAS Automotive Modules and Services Argentina S.A., has been penalized by Argentina’s tax authority, ARCA. The fine amounts to ARS 56.4 million, or approximately ₹3.7 million, and stems from improper VAT input claims and deductions made between 2019 and 2023.

The company clarified that these discrepancies occurred before its acquisition of the Argentine business, and it is now pursuing indemnity from the previous owner under the terms of the purchase agreement.

No material impact on financials

SAMIL stated that the penalty will not have a material impact on its consolidated financials. The group remains committed to regulatory compliance across all jurisdictions and is actively working with legal advisors to resolve the matter.

The company emphasized that its internal controls and post-acquisition audits have helped identify and address legacy issues in acquired entities.

Key highlights of the announcement

- ARCA imposes ARS 56.4 million (₹3.7 million) penalty on Motherson SAS Argentina
- Penalty relates to VAT claims made between 2019 and 2023
- Issues predate Motherson’s acquisition of the subsidiary
- SAMIL pursuing indemnity from the seller
- No material impact expected on consolidated financials
- Internal audits and compliance systems remain robust

Strategic outlook and governance stance

Samvardhana Motherson continues to expand its global footprint through strategic acquisitions. The company maintains a strong governance framework to manage post-acquisition risks and ensure transparency. This incident highlights the importance of thorough due diligence and post-deal integration in cross-border transactions.

Industry analysts believe the penalty is unlikely to affect investor sentiment, given its limited financial impact and the company’s proactive response.

Sources: ScanX News scanx.trade , Stock Insights stockinsights.ai , Motherson Group Disclosures