Hero scrip crashes 7% on Rs 1,000 crore false spend reports - Times of India

Hero scrip crashes 7% on Rs 1,000 crore false spend reports – Times of India


MUMBAI/NEW DELHI: The stock price of two-wheeler major Hero MotoCorp crashed over 7% on Tuesday on the back of reports that a raid by the income tax (I-T) department had unearthed bogus expenses aggregating Rs 1,000 crore and cash transactions worth about Rs 100 crore.
The stock price crash of the New Delhi-based company left its investors poorer by Rs 3,361 crore with its market capitalisation now at Rs 44,123 crore. “We neither confirm nor deny the story,” an I-T spokesperson said when asked about the report, while Hero MotoCorp categorically denied what it called speculative press reports. “The allegations made in the press reports are not borne out of any documents that have been served on us or our internal documents,” the two-wheeler company said in a statement.
“We wish to clarify that officials from the I-T department visited our offices in the previous week. The company has provided all support and cooperation, necessary documents and data to the authorities and will continue to do so if required,” Hero MotoCorp said, adding that it will inform the exchanges suitably as and when the tax department concludes its findings and communicates it to the company. It added that Hero MotoCorp is a law-abiding corporate with robust internal financial controls and its financial statements are duly audited.
In one of the most high-profile actions against a top industrial group in the country in recent times, the I-T department on March 23 conducted raids at over 20 locations of Hero MotoCorp, and also at the residence and office of company chairman and CEO Pawan Munjal, in a case linked to alleged tax evasion.
According to analysts, the company is expected to be hit at two fronts. First, in case the evasions and fraudulent transactions are proven to be correct, Hero MotoCorp will have to pay a substantial amount of penalty to the I-T department. Second, some of the funds, domestic and foreign, that hold the stock and have strong focus on environment, sustainability and governance (ESG), would also exit their holdings.
Hero MotoCorp is the country’s largest two-wheeler maker, and has factories in Haryana, Rajasthan, Uttarakhand, Gujarat and Andhra Pradesh. It also has plants overseas in neighbouring Bangladesh and Colombia in Latin America. The company has a 34% share of the country’s two-wheeler market.


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