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Polycab India’s Stock Drops 22% After IT Department Discovers “Unaccounted Sales” Totaling Rs. 1,000 Cr

<p><strong>Polycab India I-T Raids:</strong> Following the income tax department’s announcement that it had discovered “unaccounted cash sales” of over Rs 1,000 crore during a search of the company’s premises the day before, Polycab India shares fell 22% in early trading on January 11.</p>
<p><img decoding=”async” class=”alignnone wp-image-347359″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-polycab-indias-stock-drops-22-after-it-department-discovers-unaccounted-sales-tota.jpg” alt=”theindiaprint.com polycab indias stock drops 22 after it department discovers unaccounted sales tota” width=”1077″ height=”718″ title=”Polycab India's Stock Drops 22% After IT Department Discovers "Unaccounted Sales" Totaling Rs. 1,000 Cr 3″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-polycab-indias-stock-drops-22-after-it-department-discovers-unaccounted-sales-tota.jpg 510w, https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-polycab-indias-stock-drops-22-after-it-department-discovers-unaccounted-sales-tota-150×100.jpg 150w” sizes=”(max-width: 1077px) 100vw, 1077px” /></p>
<p>In the meanwhile, the markets saw many block trades totaling Rs 1,293 crore. A little over 33 lakh shares, or 2.2% of Polycab, were traded on the markets. Moneycontrol was unable to identify the transaction’s buyers and sellers right away.</p>
<p>According to a statement from the Central Board of Direct Taxes (CBDT), searches were conducted against the group on December 22, 2018, resulting in the seizure of over Rs 4 crore worth of unaccounted cash and the restriction of over 25 bank lockers.</p>
<p>It said that 50 locations were covered, including Daman, and Halol in Gujarat, Delhi, Mumbai, Pune, Aurangabad, and Nashik in Maharashtra.</p>
<p>The searches also included some of the group’s authorized distributors, according to the CBDT, the Department of Income Tax Administration’s administrative authority.</p>
<p>Although the group’s identity was not disclosed in the CBDT announcement, Polycab India Limited was verified by government sources.</p>
<p>Earlier in the day, Polycab India clarified to stock markets that claims of the business “evading taxes by circulating in the media” were “rumors.” “The business reaffirms its dedication to compliance and openness, having provided the Income Tax department authorities with complete cooperation during the December 23 search processes. The firm informed the bourses in a statement that it had not heard back from the Income Tax authorities on the search’s results.</p>
<p>According to the CBDT, several digital data files and papers containing “incriminating” evidence were taken during the searches. These demonstrate the group’s “modus operandi of tax evasion,” which it claimed it had adopted in collusion with a few authorized distributors.</p>
<p>It claimed that in order to reduce its taxable revenue, the flagship firm engaged in cash payments for unexplained purchases, cash sales, phony transportation and subcontracting expenditures, and other practices.</p>
<p>The flagship business allegedly conducted unrecorded cash transactions of almost Rs 1,000 crore that were not noted in the books of accounts, according to credible evidence found during the search, according to the CBDT.</p>
<p>The statement also said that unaccounted cash payments of more than Rs 400 crore, made by a distributor on the company’s behalf, for raw material purchases, had been discovered.</p>
<p>It said that “non-genuine” costs, including those related to procurement, transportation, and subcontracting, totaling around Rs 100 crore, had also been found in evidence taken from the company’s premises.</p>
<p>The search operation also led to the discovery of “unexplained” transactions, according to the statement, in which the distributor issued invoices for products that were not really supplied, even though those same commodities had been sold for cash on the open market.</p>
<p>In light of this, the CBDT said that the authorized distributor helped certain parties “inflate” their purchase accounts, which totaled almost Rs 500 crore. It said that the flagship company’s goods are the only ones sold by this distributor.</p>
<p>Nuvama Institutional Equities anticipates a medium-term effect on the stock after the announcement, along with a de-rating of valuations, which had increased to 37x during 2023.</p>
<p>The brokerage thinks that anything less than 14–15 percent sales growth for Polycab would further add a negative trigger, making next week’s Q3 performance even more crucial.</p>
<p>Nuvama believes that the discovery has also placed the values of the whole cable and wire pack at danger since, in the near future, the market would presume that other competitors might also engage in some of these tactics.</p>

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