Shares of Hero MotoCorp slumped over 6 percent on Friday after sources told CNBC-TV18 that the company that allegedly siphoned off Rs 800 crore -- as mentioned by the Central Board of Direct Taxes in a press statement but without mentioning the name of the firm -- is Hero MotoCorp.
At 9:57 am, shares of the two-wheeler maker were trading 3.2 percent lower at Rs 2,224 on the BSE.
Hero MotoCorp has been lately under the radar of the Income-Tax Department with search operations conducted at the company's premises for four days -- from March 23 to March 26. It covered more than 40 locations including Chairman and CEO Pawan Munjal's residence.
The Central Board of Direct Taxes in its statement on Thursday said that the I-T Dept conducted a search and seizure operation on a leading automobile manufacturer group, a company operating chartered flights and a real estate group of Delhi-NCR.
The I-T Department covered more than 35 premises across Delhi-NCR on March 23 and found various incriminating documents and digital evidence indicating bogus expenses, it said.
"During the course of the search operation, various incriminating documents and digital evidence have been found and seized indicating that the expenses ostensibly shown to have been claimed towards business purposes are not fully supported by evidences," the statement reads.
"Expenditure aggregating to more than Rs 800 crore has been booked in the guise of purchase of services from a specific event management entity. This entity has siphoned-off the money by way of layering,” said the release.
The sources, who did not want to be named, told CNBC-TV18 that the bogus expenditure of Rs 800 crore as mentioned in the release was made by Hero MotoCorp.
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“Whenever there are any red flags related to governance, tax search etc. you should and not just get carried away by the by the price movements. I think the better strategy is to wait, I was a little though positively surprised by the Q3 performance, thier EBITDA margins are actually around 12 percent which surprised me although the volumes continue to swing,” said Gurmeet Chadha, Co-Founder & CEO, Complete Circle Consultants.
“Also I think their product mix is changing I think that premiumisation is now playing out. They have done a lot of price hikes it is a good play also on the rural economy starting to pick up. There has been visible slowdown there,” he added.
So operational performance, we are at probably at a point where should pick up but when you have some concerns like this so better to wait and watch in my view and then take a call, Chadha said.
First Published: Apr 1, 2022 11:03 AM IST
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