The Ministry of Corporate Affairs (MCA) has issued an inspection order against Shree Cement, the cement maker said in a regulatory filing on July 19, days after reports claimed that the company is under the scanner for alleged tax evasion.
"This is to inform that the company has today received a letter dated 19.7.2023 from the office of Regional Director (NWR), Ministry of Corporate affairs (MCA) informing order of inspection under Section 206(5) of the Companies Act, 2013," Shree Cement informed the stock exchanges.
The aforementioned law, under which the inspection order was issued, states that the central government may, "if it is satisfied that the circumstances so warrant", direct inspection of books and papers of a company by an inspector appointed by it for the purpose.
The development comes around three weeks after news channels reported that multiple searches at the company's locations revealed that it had allegedly evaded taxes worth Rs 23,000 crore.
In response to the reports published on June 24, Shree Cement had then issued a statement to news agency Reuters, saying, "We are extending full cooperation with the Income Tax Department for the ongoing survey. The survey is yet to conclude, and we dismiss the speculative reports about tax evasion."
"As a responsible corporate citizen, Shree Cement follows the highest corporate governance standards," it added.
Following the news, however, the stock of Shree Cement was hammered by 10 percent in the subsequent trading session, as it opened at Rs 22,630.75 apiece on the BSE on June 26, marking the steepest intraday drop in over three years.
In the trading session on July 19, the scrip settled at Rs 24,067.55 apiece on the BSE, which was 0.45 percent higher than the previous day's close.
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