Polycab Shares Tumble 20% after I-T Dept Detects Unaccounted Sales Worth Rs1,000 Crore during Raid

Moneylife Digital Team 11 January 2024

Investor Interest

Shares of Polycab India Ltd tumbled 20% on Thursday following reports about the income-tax (I-T) department detecting unaccounted cash sales of around Rs1,000 crore which are not recorded in the company's books of accounts. Further, during the raid, the I-T department also seized evidence of unaccounted cash payments of more than Rs400 crore made by a distributor on behalf of Polycab towards purchasing raw materials. During the morning trade, Polycab tumbled 20% to Rs3,812.35 on the BSE. After market hours, Polycab clarified that it had not received any written communication from the I-T department regarding the outcome of the search.

In a release, the Union ministry of finance says, "I-T department initiated search and seizure operations in the case of a group engaged in the manufacturing of wires and cables and other electrical items on 22 December 2023. Some of the authorised distributors of the group were also covered in the search. The search action was conducted at more than 50 premises located in Mumbai, Pune, Aurangabad, Nasik, Daman, Halol and Delhi."

"During the course of the search operation, a large number of incriminating evidence in the form of documents and digital data have been found and seized. This evidence reveals the modus operandi of tax evasion adopted by the group in connivance with some authorised distributors. Preliminary analysis suggests that the flagship company indulged in unaccounted cash sales, cash payments for unaccounted purchases, non-genuine transport and sub-contracting expenses for suppression of its taxable income," the release says.

During its search operations, the tax department recovered credible evidence establishing that Polycab made unaccounted cash sales of around Rs1,000 crore which are not recorded in the company's books of accounts. Further, non-genuine expenses like sub-contracting expenses, purchases and transport expenses aggregating about Rs100 crore have also been identified in the seized evidence from the premises of the company.

According to the ministry, the search action also resulted in the determination of unexplained transactions undertaken by the distributor for issuing bills without a genuine supply of goods, whereas such goods have been sold in open markets in cash. "Thus, the authorised distributor facilitated certain parties to inflate their purchase accounts, which aggregate to about Rs500 crore. This distributor exclusively sells products of Polycab."

During the search operation, unaccounted cash exceeding Rs4 crore was seized and more than 25 bank lockers were put on restraint, the release says.

Polycab reiterated that between 22nd December to 30 December 2023, officials from the I-T department searched some of the premises and plants of the Company. "While the post-search proceedings will take its own course, the Company will continue to fully cooperate with the I-T department in this regard. There is no material adverse impact on the financial position of the Company," it says in a regulatory filing.

Polycab ended Thursday 21% down at Rs3,877.40 on the BSE, while the 30-share benchmark Sensex closed marginally up at 71,721.18 points.

Comments

User

pallavoorsubramanian

2 years ago

one more scam in the making. The Company, being family managed, has no governance structure in place and indulges brazenly in unlawful acts hoping to get away.

sunder.vijay

2 years ago

Please give some more insights into this case.

iaminprabhu

2 years ago

SHOCKING the ways companies work to CHEAT, AVOID TAXES, LAUNDER MONEY as if it's routine matter!

Shareholders & Govt. PRIVATE Investor's should demand "SACKING - RESIGNATIONS of entire Jaisinghani clam" after such findings of loot!

Ashutosh Tyagi

2 years ago

please provide insights on this topic further