In a significant development, the Enforcement Directorate (ED) conducted raids at the residence of Pawan Munjal, the Chairman of Hero MotoCorp, as part of an ongoing investigation into money laundering allegations. The raids were carried out at properties in Delhi and Gurugram, in accordance with the provisions of the Prevention of Money Laundering Act (PMLA). This is not the first time that Pawan Munjal has faced such scrutiny, as he has been previously subjected to raids by the Income Tax Department on allegations of tax evasion.
This latest Enforcement Directorate (ED) raid on Pawan Munjal’s residence took place on Tuesday. The Enforcement Directorate officials swooped down on Pawan Munjal’s residence to probe alleged money laundering activities. The investigation was triggered by a complaint from the Directorate of Revenue Intelligence (DRI), focusing on a person purportedly connected to the Hero MotoCorp Chairman. This individual was previously under investigation for carrying undeclared foreign currency.
As a result of the ED raid, shares of Hero MotoCorp took a significant hit in Tuesday’s trade, with the stock plunging 5.34% and hitting a low of ₹3,032.10 on the Bombay Stock Exchange (BSE). Despite the recent decline, the company’s scrip is still showing a year-to-date gain of 13%.
Previous Raids and Allegations
This is not the first time that Pawan Munjal has found himself under the regulatory lens. In March 2022, the Income Tax Department conducted searches at various offices of Hero MotoCorp on charges of alleged tax evasion. During this period, the department also conducted raids at Pawan Munjal’s residence.
The Income Tax Department’s investigation revealed shocking findings, including over Rs 1,000 crore in bogus expenses, massive unaccounted cash expenditures, and violations related to a farmhouse purchase in Delhi. The department even claimed that Rs 100 crore from Pawan Munjal’s alleged black money stash was used to pay for the farmhouse, which is a violation of Section 269 SS of the Income Tax Act.
Hero MotoCorp, the world’s largest two-wheeler manufacturer, has vehemently denied all allegations. According to the company’s official statement, officials from the Income Tax Department conducted routine inquiries at two of their offices in Delhi and Gurugram, as well as at Pawan Munjal’s residence. The company emphasized that such inquiries are not uncommon before the financial year-end. Hero MotoCorp maintains that they uphold the highest standards of corporate governance and are an ethical and law-abiding corporate entity.
The recent raids and the ongoing investigations have had a tangible effect on Hero MotoCorp’s share price, which witnessed a more than 7% intraday decline. However, the company remains steadfast in its business operations and is actively working to bring new electric vehicles to the Indian market. Hero MotoCorp has recently announced a partnership with Taiwanese two-wheeler maker Gogoro to develop electric vehicles and incorporate Gogoro’s swappable battery solutions, addressing the issue of charging infrastructure in India.