Following a little respite, the shares of Polycab India Ltd. began to decline on Thursday, plunging more than 22% as the income tax agency conducted a new search of Polycab India’s facilities on January 10. The officials searched 50 Polycab India locations in Pune, Aurangabad, Mumbai, and Nashik in Maharashtra, according to the Ministry of Finance. Additionally, reports state that searches have been carried out in Delhi and Daman, Gujarat.
The Ministry stated that numerous pieces of damning evidence, including documents and digital data, were discovered and taken into custody during the search operation. These facts show how the group, working with a select few authorized distributors, used a tax evasion strategy. According to preliminary findings, the flagship firm engaged in cash payments for unaccounted purchases, cash sales for unaccounted sales, phony transportation and subcontracting charges, and other practices to reduce its taxable income, according to the Ministry of Finance.
Shares of Polycab India dropped 22.4%, reaching a low of Rs 3,812.35 on the BSE.
The flagship company has reportedly made unrecorded cash sales of approximately Rs. 1,000 crore that are not shown in the books of accounts, according to credible evidence uncovered during the search. Evidence of unrecorded cash payments of over Rs. 400 crore made by a distributor to buy raw materials on behalf of the flagship firm has also been found, according to the Ministry of Finance.
Furthermore, the government stated in a release that evidence collected from the flagship company’s facilities included non-genuine charges in the form of purchases, transportation, and subcontracting expenses, totaling approximately Rs 100 crore.
The search operation also led to the discovery of mysterious transactions made by the distributor, who issued invoices for commodities that were never actually supplied even though they were paid for in cash on the open market. Consequently, the authorized distributor enabled some parties to artificially increase their purchase accounts, totaling around Rs. 500 crore. This distributor only offers goods from the main company.
Over 25 bank lockers have been placed under restraint and unaccounted cash surpassing Rs. 4 crore have been seized during the search operation.
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