Shares of Hero MotoCorp fell over 1 percent in early trade on June 16 following reports that the Ministry of Corporate Affairs initiated a probe against the country’s two-wheeler manufacturer.
After acknowledging a previous inquiry carried out by the Income Tax department regarding specific transactions of Hero Motocorp, the Ministry of Corporate Affairs (MCA) has initiated an investigation, as per news reports.
News agency Reuters reported that the MCA will evaluate the association between the company and a third-party vendor in a case related to the alleged diversion of funds. Additionally, the MCA will also scrutinize the ownership structure of the company.
Accordingly, at 09.22 am, shares of Hero Motocorp were trading 0.6 percent lower at Rs 2,826.60 on the National Stock Exchange. Buzz of the probe also saw the stock drop 4 percent on June 15.
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However, this is not the first time that the company has landed in government probes. In March last year, the income tax department conducted raids on premises associated with Hero MotoCorp in various parts of North India. As per sources who spoke to news agency PTI, the raids were part of a probe into an alleged case of tax evasion. The officials were examining the company's financial documents and business transactions, along with those of its promoters.
Hero MotoCorp, on the other hand, stated that the tax inspectors visited its offices and the residence of CEO Pawan Munjal (now vice chairman) as part of a routine inquiry.
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