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Business News/ Companies / Delhi Police registers FIR against Hero MotoCorp, stock tumbles 2.5%

Delhi Police registers FIR against Hero MotoCorp, stock tumbles 2.5%

At around 12.26 pm, the stock is down 2.75 percent or 83.50 points to 2954.35 from day's open.

The Enforcement Directorate (ED) had conducted searches against Munjal and others as part of a money laundering investigation in August 2023Premium
The Enforcement Directorate (ED) had conducted searches against Munjal and others as part of a money laundering investigation in August 2023

The Delhi Police has registered a First Information Report (FIR) against Hero MotoCorp alleging ‘forgery’. The complainant is Brains Logistics.

As per the FIR seen by Mint, the complainant has alleged that the accused colluded to “cheat and falsify the books… and manufactured fake month wise bills debited against the complainant totaling 5,94,52,525 ( 5.95 crore) for 2009 and 2010."

Brains Logistics further alleged that its contract with Hero MotoCorp ended on March 31, 2009 and thus all bills claiming debits to them post that date are falsified.

Brains Logistics has also named Pawan Munjal, two other officers at Hero MotoCorp, Vikram Kasbekar and Hari Gupta; Manjula Banerji (auditor for the company in 2009 and 2010), identified as a partner in Deloitte Haskens & Sells. 

After the news came out, the Hero Moto share price fell about 3 percent but later pared some losses to close at 2,960, down 75.8, or 2.50%.

“This is to inform that it is an old matter pertaining to the year 2009-10 with a disgruntled service provider, Brains Logistics Pvt. Ltd. (Promoter - Roop Darshan Pandey). It may also be noted that while the complainant has mentioned company officials in the complaint, however, no official has been named in the FIR. In 2013, Hero MotoCorp also registered an FIR against them and the matter is ongoing before the competent court," Hero MotoCorp said in an exchange filing clarifying on Mint story.

Also Read: Who is Pawan Munjal? Hero MotoCorp confirms ‘ED visit’ at Chairman's residence; here's what we know

Trouble brewing

In August of this year, the Enforcement Directorate (ED) conducted searches related to a money laundering investigation involving Munjal and others, according to official sources as reported by PTI.

The searches took place at the 69-year-old billionaire businessman's residential and business premises in Delhi and neighbouring Gurugram, as well as at locations associated with some linked entities.

The ED initiated these raids following the registration of a case against them under the provisions of the Prevention of Money Laundering Act (PMLA), the sources added.

Also Read: Hero MotoCorp informs about Sunil Munjal's exit, family settlement agreement as per 2016 plan

The company issued a statement acknowledging the ED's visit to two offices in Delhi and Gurugram, along with the residence of their Executive Chairman, Dr Pawan Munjal. The statement emphasized the company's commitment to cooperating with the agency.

The allegations

The ED case originates from a complaint filed against Munjal by the Directorate of Revenue Intelligence (DRI), an investigative branch of the Central Board of Indirect Taxes and Customs (CBIC), the report added.

According to reports, Customs authorities apprehended the executive based on information from the Central Industrial Security Force (CISF).

During security checks just before the executive and Munjal were to board a British Airways flight to London from the Delhi international airport on August 20, 2018, CISF discovered foreign currency exceeding 81 lakh in his hand baggage.

The Customs seized this currency under foreign exchange management laws, and the legal proceedings for this case are reported to be ongoing.

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In March 2022, the Income Tax Department conducted raids at the premises of Munjal and Hero MotorCorp as part of an investigation into tax evasion. The Central Board of Direct Taxes, the administrative authority for the I-T Department, reported that during these searches, the tax officials uncovered alleged illegal business expenses exceeding 800 crore. Additionally, they found records indicating the use of 60 crore in "unaccounted" cash for the purchase of land in Delhi and the involvement of certain shell companies.

In response to these findings, the automobile company stated in a regulatory filing that it is a "law-abiding corporate, with robust internal financial controls" and highlighted that its "financial statements are duly audited."

The company

Hero MotoCorp is the world's largest two-wheeler manufacturer based on unit volume sales in a calendar year since 2001, holding on to this title for the last 20 consecutive years, as per its website.

With a presence in 40 countries across Asia, Africa, and South and Central America, the company has established a significant global footprint.

As stated on its official website, Hero MotoCorp highlights that "over the past 10 years, the company has rapidly expanded its capacity, geographic footprint, customer touchpoints, and R&D capabilities to emerge as a truly global brand."

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Published: 09 Oct 2023, 12:32 PM IST
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