The sleuths of the Enforcement Directorate have raided the residential and business premises of Hero Motocorp chairman Pawan Munjal in a foreign currency-related case.
The searches were carried out at the premises of the 69-year-old billionaire businessman, the promoter of India’s largest two-wheeler automobile manufacturer, in Delhi and neighbouring Gurgaon apart from some linked entities, officials said.
The raids were launched after the ED registered a case against them under the provisions of the Prevention of Money Laundering Act (PMLA), they said.
In a statement, the company said: “Officials from the Enforcement Directorate (ED) on Tuesday visited two of our offices in Delhi and Gurugram (Gurgaon) and the residence of our Executive Chairman Dr Pawan Munjal. We continue to extend all cooperation to the agency.”
The ED case stems from a complaint filed against Munjal by the Directorate of Revenue Intelligence (DRI), an investigative arm of the Central Board of Indirect Taxes and Customs (CBIC).
The ED is understood to have also taken into account a customs department case against Munjal and an executive belonging to a “third party service provider” company that Hero MotoCorp hired to accompany and look after the travel and logistics arrangements for Munjal during a business trip to London in August 2018.
Customs authorities are stated to have apprehended the executive on information from the Central Industrial Security Force (CISF).
The CISF had seized foreign currency worth more than Rs 81 lakh in his hand baggage during security checks just before the executive was supposed to take a British Airways flight to London along with Munjal from the Delhi international airport on August 20, 2018.
The customs seized this currency under the foreign exchange management law and the litigation in this case is stated to be continuing.
The income-tax department in March last year had raided the premises of Munjal and Hero MotorCorp as part of a tax evasion investigation.
The Central Board of Direct Taxes, the administrative authority for the I-T department, claimed they found illegal business expenses of over Rs 800 crore and records showing Rs 60 crore worth of “unaccounted” cash used to purchase land in Delhi and the role of some shell companies.
In June, the ministry of corporate affairs ordered a probe into Hero MotoCorp’s association with a third-party vendor following complaints of alleged diversion of funds by the country’s largest two-wheeler manufacturing company.
The MCA had ordered an investigation into the ownership structure of the two-wheeler maker using rarely-used provisions of the Companies Act — sections 210(1) (c) and 216. Section 216 allows the government to appoint investigators to identify the persons “who are or have been able to control or to materially influence the policy of the company”.
Shares of Hero MotoCorp on Tuesday fell more than 3 per cent amid reports of the ED raids.
The stock of the two-wheeler maker declined 3.14 per cent to settle at Rs 3,103 apiece on the BSE. During the day, it fell 5.34 per cent to Rs 3,032.10.
On the NSE, it lost 3.23 per cent to end at Rs 3,100.05 per share. The company’s market valuation fell from Rs 2,007.4 crore to Rs 62,010.87 crore.
Hero MotoCorp became the world’s largest two-wheeler manufacturer in 2001, in terms of unit volume sales in a calendar year, and has maintained the title for the past 20 consecutive years. The company has a presence across 40 countries in Asia, Africa, and South and Central America.
The company said on its official website that “over the past 10 years, the company has rapidly expanded its capacity, geographic footprint, customer touch points and R&D capabilities to emerge as a truly global brand.”
