January 11, 2023
New Delhi, India
Polycab India, a leading player in the electrical industry, faced a significant setback as its share price plummeted over 22% following reports of an Income Tax (I-T) raid on the company’s premises.
Concerns Mount Over Tax Evasion Allegations:
Investors grew wary after media reports suggested that Polycab is accused of tax evasion, with the Income Tax Department identifying undisclosed income of ₹200 crore. The market responded with a 9% fall on January 9, and the decline continued on January 11 as search operations details emerged.
Company Denies Allegations:
In response to the allegations, Polycab issued a press release on January 9, vehemently denying any wrongdoing. The company emphasized its commitment to compliance and transparency, stating it cooperated fully during the search proceedings in December 2023. However, the share price continued its decline.
Income Tax Department’s Findings:
Media reports indicated that the Income Tax Department discovered discrepancies in Polycab‘s financial records during the search. It is speculated that the department might issue a notice demanding payment for alleged evaded taxes and penalties. Transactions worth ₹250-300 crore in the promoter accounts have also been identified, adding to concerns.
Broader Industry Implications:
On January 10, a PIB report, without explicitly naming Polycab, disclosed that the Income Tax Department initiated search and seizure operations on December 22, 2023, related to a conglomerate involved in the production of wires, cables, and electrical items. The report highlighted potential tax evasion practices within the industry.
Market Reaction and Future Outlook:
Investors are closely monitoring the situation, seeking clarity on the allegations and their potential impact on Polycab’s financial health. The ongoing investigations and any subsequent actions by regulatory authorities are expected to influence the company’s share price and market sentiment in the coming days.
The sharp decline in Polycab India’s share price underscores the market’s sensitivity to allegations of tax evasion. As the Income Tax Department’s investigations unfold, stakeholders await further developments that could shape the company’s future trajectory.
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