On Thursday, the share price of Shree Cement witnessed a decline of more than 2% in morning trade following the revelation of a government-ordered inspection. Earlier reports had alleged that the government issued inspection orders against the company over suspected tax evasion, but Shree Cement had categorically denied these claims in a regulatory filing submitted on July 11.
However, in a recent filing with the Bombay Stock Exchange (BSE) on July 19, Shree Cement confirmed that they had received a letter from the Ministry of Corporate Affairs (MCA), specifically the Regional Director (NWR), informing them about the issuance of an inspection order.
The Ministry of Corporate Affairs (MCA) had issued the inspection order on July 11, expressing concerns about related party transactions, corporate governance practices, and potential issues related to improper income tax filings.
The recent inspection order followed the Income Tax (I-T) department’s survey action at five locations of Shree Cement in Rajasthan. The purpose of this survey action was to conduct a thorough investigation into the actual income earned by the company for the relevant financial year. According to reports, the I-T department closely examined the deductions claimed by Shree Cement under section 80IA and discovered discrepancies leading to the classification of these claims as false.
In response to the allegations of tax evasion, Shree Cement has vehemently denied any wrongdoing and reiterated that the I-T survey is still ongoing. The company’s management team has fully cooperated with the officials from the Income Tax Department, providing all the necessary information to address their concerns.
Amidst the controversy, Shree Cement’s share price experienced a 1.41% decline, trading at ₹23,685.40 around 9:50 am on BSE. It is worth noting that the stock achieved its 52-week high of ₹27,013 on February 21, 2023, while its 52-week low stood at ₹20,061.65 on July 28, 2022, on BSE. The situation has attracted significant attention as stakeholders closely monitor the developments in relation to the inspection order and its potential implications on the company’s financial standing and reputation.