Shares of Delta Corp Ltd. are down to a three-year low on Monday. Another subsidiary of the company, Deltatech Gaming Ltd. has received a tax demand from the Directorate General of GST Intelligence worth over Rs 6,000 crore.
The latest tax demand notice has taken Delta Corp's total tax liabilities to over Rs 23,000 crore, which is more than six times higher than its overall market capitalisation of just under Rs 4,000 crore.
A deluge of tax payment notices have weighed down heavily on the online gaming industry. These demands are nearly worth Rs 1 lakh crore. Delta Corp and its subsidiaries find themselves at the epicenter of this financial storm.
Delta Corp saw a significant blow in July 2023 when the GST Council announced new tax rates affecting its core businesses, including casinos, horse racing, and online gaming. These new regulations included:
The GST Council decided to impose a uniform tax rate of 28% on casino operations, horse racing, and online gaming. This move significantly increased the tax burden on Delta Corp's revenue streams.
It all began on September 22 when Delta Corp disclosed that it has received a tax notice from the Directorate General of GST Intelligence in Hyderabad worth a staggering Rs 11,139 crore. This was inclusive of interest and penalties allegedly to have accrued between July 2017 and March 2022.
The initial shock was followed up by another notice on the same day as three of Delta Corp's subsidiaries - Casino Deltin Denzong in Sikkim, Highstreet Crusies and Entertainment and Delta Pleasure Cruise Company received tax demands worth Rs 628 crore, Rs 3,290 crore and Rs 1,765 crore respectively, taking the cumulative demand to Rs 16,823 crore.
Delta Corp's shares have been on a downward spiral since then. The stock has tanked on Monday as well, following the most recent tax demand.
| Company | Tax Notice Amount | Period | Disclosed On |
| Delta Corp | Rs 11,139.61 Cr | July 2017 - March 2022 | September 22 |
| Casino Deltin Denzong | Rs 628.2 Cr | July 2017 - March 2022 | September 22 |
| Highstreet Cruises | Rs 3,289.94 Cr | July 2017 - March 2022 | September 22 |
| Delta Pleasure Cruise | Rs 1,765.21 Cr | July 2017 - March 2022 | September 22 |
| Deltatech Gaming | Rs 6,236.81 Cr | January 2018 - November 2022 | October 14 |
| Deltatech Gaming | Rs 147.51 Cr | July 2017 - October 2022 | October 14 |
In response, Delta Corp has stated that these amounts claimed are based on the gross bet value of all games played during the relevant period rather than the gross rake amount. "It has been an industry issue, and various representations have already been made to the Government at an industry level in relation to this issue," the statement said.
The company further said that it is committed to exploring all available legal remedies to challenge these tax demands and associated proceedings, deeming them arbitrary and contrary to the law.
Once the darling of high-net-worth investors (HNI), Delta Corp's shares have witnessed a dramatic reversal of fortunes. The stock has halved from its June 2023 high of Rs 260 in just 100 days.
The company's woes were compounded by disappointing financial results for the September quarter, failing to provide any respite to investors. Revenue, net profit and operating performance were flat compared to the same quarter last year.
Shares of Delta Corp have been in the Futures & Options ban for most part of the September and October F&O series. Being in the ban means no new positions can be created in the stock.
As Delta Corp navigates this tumultuous period, investors and analysts are closely watching to see whether the company can regain its lost glory or if the downward spiral will continue.
(Edited by : Hormaz Fatakia)
First Published: Oct 16, 2023 10:15 AM IST
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