Hero MotoCorp on Thursday said it has not received any communication from the government regarding a case related to alleged diversion of funds with a third party.
The development comes after reports of the company being under the government’s watch with the Ministry of Corporate Affairs (MCA) initiating a probe against it.
“We have not received any communication in this regard and hence cannot comment on the contents of your queries. We will provide all information, if and when it is sought from us by any regulatory authority,” a spokesperson at Hero MotoCorp told businessline.
Ownership structure
“Hero MotoCorp, the world’s largest manufacturer of motorcycles and scooters, is a responsible, law abiding and much-admired Indian multinational, and known for following global best governance practices,” the spokesperson added.
According to sources, the MCA has ordered an investigation to assess Hero MotoCorp’s relationship with a third-party vendor in a case related to alleged diversion of funds.
The investigation has been ordered in the ‘public interest’ to probe the ownership structure of Hero MotoCorp and whether it controlled the third-party vendor, sources said.
Sources said that an inquiry by the Registrar of Companies has also concluded for a thorough investigation into the affairs of the company and linked entities — Hero MotoCorp and Salt Experiences and Management Private Limited (SEMPL) under Sections 210 (1) (c) along with section 216 of the Companies Act.
Sources further said that the investigation will delve into the findings of the Income Tax and Customs departments regarding the two companies in relation to corporate governance matters.
Last March, the Income Tax Department had detected cash transactions of more than ₹100 crore in the purchase of a farmhouse by Pawan Munjal, Executive Chairman and Whole-time Director, Hero MotoCorp (then Chairman and CEO) in Chhattarpur (Delhi). It was alleged that the market price of the farmhouse was altered to save tax, and for this purpose, an amount of over ₹100 crore was paid in cash.