Hero Motocorp Faces Government Probe Over Diversion Of Funds Months After Search By Tax Department

Hero, formerly known as Hero Honda, is a brand synonymous with the rise of two-wheelers zooming across Indian roads for decades. It remains one of India's major motorcycle brands with a 32 per cent market share, although it was overtaken by Honda last year.

But this time, the iconic bike-maker is in the news for a probe initiated against it by the Ministry of Corporate Affairs regarding diversion of funds.

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The government's investigation has been launched after the Income Tax Department conducted a search at Hero Motocorp's premises in March this year.

Tax authorities were looking into transactions conducted by the firm and its promoters, as they faced allegations of tax evasion.

The probe against Hero has been launched under a provision that allows such action against firms in public interest.

Hitting rocky terrain during a slowdown?

Although Hero called the search by IT in March a routine inquiry, the follow up by the ministry suggests that there's more to it.

The case is related to transactions with a third party vendor, and also triggered a 4 per cent drop in Hero's stock prices.

News of the investigation comes weeks after Hero Motocorp reported a 7 per cent rise in sales for May 2023, after losing market share in FY23.