The shares of automobile major Hero Motocorp slipped by over seven percent on March 29, as the market reacted adversely to the reports which claimed that the Income Tax Department detected bogus expenses to the tune of Rs 1,000 crore made by the company.
Sources told CNBC TV18 that the claims related to the false expenses were detected in the I-T raid conducted from March 23 to March 26 at premises linked to Hero Motocorp.
While an official statement was awaited, news agency ANI learnt from sources that "incriminating evidence" was found in the form of hard copies and digital data.
Reacting to the reports, Hero Motocorp said the speculations are baseless. "We categorically deny the speculative press reports," it said, adding that the bogus expense allegations are "not borne out of any document served on us or our internal documents".
"We will inform exchanges once I-T Department concludes its findings," it further noted.
The market witnessed a significant drop in the stock of Hero Motocorp shortly after the reports were out. At 3:15 pm, the shares were trading at Rs 2,206 a piece at the BSE, which was 7.18 percent lower as compared to the previous day's close. The stock eventually settled at Rs 2,208.35, down 7.08 percent.
Notably, the I-T raids last week were carried out at two of the Hero Motocorp offices in Delhi and Gurugram, and at the residence of the company's chairman and CEO, Pawan Munjal.
In a statement issued following the search operations, Hero Motocorp said it was a "routine inquiry" conducted by the I-T Department.
"We have been informed that this is routine inquiry, which is not uncommon before the end of the financial year," the company had said, adding that "we assure all our stakeholders that it continues to be business as usual".According to ANI, the I-T Department detected cash transactions of more than Rs 100 crore in the purchase of a farmhouse by Munjal in Chhattarpur, on the outskirts of Delhi. The market price of the farmhouse was altered to save tax, and for this purpose, an amount of over Rs 100 crore was paid in cash, the news agency claimed, citing sources. Moneycontrol could not independently verify the claims made in the report.