When Rahul Mehta, CEO of Rathvaan Pvt. Ltd., returned to his hometown of Agra after completing his mechanical engineering in Delhi, he envisioned a…

When Rahul Mehta, CEO of Rathvaan Pvt. Ltd., returned to his hometown of Agra after completing his mechanical engineering in Delhi, he envisioned a full-service automotive company that could serve urban families, corporate fleets, and commercial clients alike. Early in his career, Mehta led efficiency-driven projects at a leading OEM supplier, refining assembly workflows and quality controls. Motivated by the challenge of delivering dependable vehicles across India's diverse markets, he founded Rathvaan Pvt. Ltd. in Agra in 2003 with a small team of engineers and a basic workshop. Today, the company employs hundreds of people and is governed by a Board of ten directors. Considering this rapid growth, the Board of Rathvaan Pvt. Ltd. resolved to induct six more directors, including two designated as independent directors pursuant to an internal governance charter adopted by the Board and a shareholders' agreement signed by all existing members. The company convened an Extraordinary General Meeting on April 15, 2025, with notice dated 6th April 2025, to pass a special resolution to approve these appointments. The notice was published in vernacular and English newspaper and uploaded on the company's website but not dispatched to members and no explanatory statement accompanied the notice. The two independent director appointees were not registered in the databank at the time of the EGM but had applied for registration by 15th May 2025. DIR-12 filings for all six appointees were made on 30th April 2025, with attachments including the Board resolutions and consents. The Articles of Association limited the number of directors to 12 at the time of appointment. A special resolution to approve the appointments was passed unanimously at the EGM. A few months earlier, at the AGM held on September 29, 2024, Mr. Ranvir's appointment to fill the casual vacancy was not proposed/approved, as the Board was of the view that it is not required now or even subsequently. Originally, Mr. Rishi had joined the Board as a Non-Executive Director for a three-year term at the AGM on September 30, 2022. However, on 2nd October, 2023, Mr. Rishi suffered a severe heart failure and expired. The Board of Directors of the company on 16th October, 2023 appointed Mr. Ranvir for a term of three years to fill the casual vacancy so created. The CFO of the company is of the opinion that the Board of Directors have contravened the provisions of the Companies Act, 2013 in respect of non-approval of the appointment of Mr. Ranvir and his office tenure. Operational Model and Service Portfolio Leveraging its talented leadership bench and workforce, Rathvaan has streamlined operations and introduced a broader array of services. This foundation has propelled the company over the past two decades to become a leading manufacturer of cars in India's automotive sector and a registered supplier in Agra, known for its end-to-end vehicle design, production, and delivery services. The Company oversees a comprehensive ten-month operational cycle from the procurement of raw materials to the completion of passenger-vehicle assembly and final delivery while customers settle their dues after a period of 10 months from the date of sale. Rathvaan offers a diverse lineup of vehicles, with a particular focus on fuel-efficient family sedans, compact SUVs, and light commercial vans, complemented by garage-door solutions (details of Garage door installation services provided by Rathvaan are attached as Annexure I) for residential and commercial clients. Their offerings meet the needs of individual, fleet, and corporate clients, providing tailored financing and after-sales support. This disciplined production and payment structure is central to the Company's value proposition, ensuring predictable cash flows and long-term customer trust and aligns with its ambitious expansion plans to venture into new service domains. Expanding Services Through Acquisition of Yatrik As part of its strategic expansion and service-chain optimization, Rathvaan Pvt. Ltd. has undertaken a targeted acquisition in the travel sector. Rathvaan decided to acquire Yatrik, a tour-operations company specializing in curated travel packages, adventure tours, and end-to-end trip management services across India. This forward integration move is aimed at integrating Yatrik's platform with Rathvaan's vehicle sales and after-sales services to create bundled mobility and leisure offerings. Through this acquisition, Rathvaan said it hopes to enhance its service portfolio and operational efficiency by leveraging its nationwide dealer network alongside Yatrik's core technological capabilities. Rathvaan initially acquired 8% of the equity share capital of Yatrik On 1st April 2023, for 92,000. Rathvaan accounts for its investment in Yatrik at Fair Value through OCI. On 31st March 2024, Rathvaan carried its investment in Yatrik at fair value and reported an unrealised gain of 8,000 in other comprehensive income, which was presented as a separate component of equity. On 1st April 2024, Rathvaan obtains control of Yatrik by acquiring the remaining 92 percent of Yatrik. After acquiring Yatrik, the founder, Rahul Mehta, turned his attention to Rathvaan's own manufacturing capabilities, prioritizing capacity expansion and equipment upgrades. Modernizing Infrastructure and Equipment Upgrades Rathvaan's aging IT infrastructure and plans to expand its car manufacturing operations led the company to invest 5 lakh on 1 May 2020 in several new computers of the latest models. All equipment was insured with United Bharat Assurance Ltd. against fire, flood, earthquake, and other risks under a reinstatement clause requiring the insurer to pay the computers' value as of the date of fire etc., in case of destruction or loss. By 1 April 2024, the written-down value of these assets stood at 2,12,150. In August 2024, a fire broke out in Rathvaan's facility, destroying all computer systems, which remained unreplaced as of 31 March 2025 because Rathvaan awaited the release of newer models. Rathvaan received the full 5 lakh insurance payout on 15 March 2025, but no additional computers were purchased during FY 2024-25. Building on its drive to replace old equipments and expand capacity, Rathvaan decided to discard an obsolete injection molding machine (used for producing plastic dashboards, bumpers, and interior trim) in June 2024 to improve operational efficiency. This discarded machinery belonged to the block of Plant & Machinery chargeable to depreciation @ 15%, which has 10 different machinery items as at 31 March 2025. For A.Y. 2025-26, Rathvaan claimed total depreciation of 20 lakhs which includes 2 lakhs being the depreciation claimed on the machinery item discarded. The A.O. disallowed the claim of depreciation of 2 lakhs during the course of scrutiny assessment. The Cashier committed fraud and absconded with the proceeds. The Chief Accountant was unaware of when the fraud occurred. During the audit, the auditor failed to discover the fraud. However, after completion of the audit, the Chief Accountant discovered the fraud, and an investigation indicated that the auditor did not exercise proper skill and care, performing the work in a desultory and haphazard manner. Details of Sales Made to Key Customers and Related Outcomes High-Performance Engines Sold to Chola Ltd. During the year 2024-25, Rathvaan sold 10 high-performance petrol engines to Chola Ltd., a long-standing client in the logistics and distribution industry, for a total consideration of 5 lakhs. The payment is receivable in three instalments:1,66,666 on 1st April 2024,1,66,667 on 31st March 2025, and - 1,66,667 on 31st March 2026. The company is offering a discount of 5 % (i.e.25,000) if payment is made in full at the time of sale. The sale agreement reflects an implicit interest rate of 5.36% p.a. The total consideration to be received from such sale is at 5 Lakhs and hence, the management has recognised the revenue from sale of goods for 5 lakhs for the year 2024-25. Delivery Vans Supplied to Trackon Pvt. Ltd. On 20th March 2025, Rathvaan issued tax invoice for two light commercial delivery vans valued at 10 lakh each (excluding GST 28%) to Trackon Pvt. Ltd., a registered courier and logistics provider based in Firozabad. However, no underlying supply of vans was made. Subsequently, ITC was availed based on said invoice by Trackon Pvt Ltd. and utlised for payment of its tax liability in respect of its outward supplies of taxable goods. SwiftEx Sedan Sold to Mr. Amber On 30 September 2024, Rathvaan supplied a Rathvaan SwiftEx sedan to Mr. Amber. On 1 January 2025, the company was notified that Mr. Amber had initiated legal action against the company in respect of a financial losses allegedly caused by defects in the vehicle. Rathvaan defended the case but considered, based on the progress of the case up to 31st March 2025, that there was a 75% probability they would have to pay damages of 8 lakhs to the customer. However, the accountant of Rathvaan has not recorded this transaction in its financial statement as the case is not yet finally settled. The financials have been approved by the Board of Directors in its meeting held on 18th May 2025. (The Supreme Court's judgment on this case has been widely reported in the newspapers-see Annexure II.) Annexure - I Garage Door Installation Services Provided by Rathvaan Pvt. Ltd. during the month of April 2024 Part Install Replace Adjust Lubricate Total Door 3 6 2 1 12 Motor 4 3 17 10 34 Track 6 1 7 7 21 Trimmer 15 7 1 1 24 T-Lock 6 1 2 1 10 Miscellaneous 1 3 2 2 8 Total 35 21 31 22 109 The team provides installations, replacements, adjustments, and lubrication services across various garage door components. Annexure - II The State News Supreme Court Directs Rathvaan to Pay 10 Lakh Compensation for Defective Car June 1, 2025, New Delhi – In a landmark consumer-protection judgment, the Supreme Court of India has directed Rathvaan Pvt. Ltd., a prominent car manufacturer, to pay 10 lakh in compensation to a customer who suffered financial losses after purchasing a defective vehicle. The bench—led by Justices R. Vasudevan and N. Banerjee—held that the defects in the car supplied on 30 September 2024 caused substantial economic harm and that Rathvaan failed to uphold the quality standards promised at the time of sale. The customer initiated legal proceedings on 1 January 2025, seeking redress for repair costs, loss of use, and other incidental expenses. Despite Rathvaan's defense that the defects were minor, the Court found the company liable for breach of its statutory duty under the Consumer Protection Act. The case was ultimately settled on 15th May 2025 against the company, resulting in the payment of 10 lakhs as damages to the customer. Accordingly, Rathvaan is required to deposit the compensation amount within eight weeks, failing which it will be liable to pay interest at 9% per annum. The Court also remarked: “Manufacturers must ensure vehicles are fit for purpose before they reach consumers. A failure to do so invites both legal and financial consequences."