Refex Industries Stock Plummets 20% After Tax Evasion Allegations

Refex Industries Share Price Takes a Hit

Shareholders of Refex Industries were shocked as the stock price fell by 20% to ₹254.90, its lowest level since August 2024. This drop came after the Income Tax Department revealed that it had discovered tax evasion of over ₹1,000 crore by the Refex Group and its associates.

Investigation and Search Operations

The Income Tax Department conducted a raid on December 9 and found several irregularities, including bogus purchases worth ₹1,112 crore related to coal procurement and ash-handling contracts. They also discovered unexplained investments of ₹250 crore in a Swiss pharmaceutical company.

Allegations of Shell Companies and Anonymous Investments

The investigation found that the company received an equity contribution of ₹382.68 crore from 53 individuals and entities, including 15 non-filers and 37 people who did not disclose transactions in their tax returns. Many of these contributors are employees or associates of the promoters, leading to suspicions of anonymous investments.

The Income Tax Department also found that the promoter created shell companies in the name of his driver, through which cash deposits of ₹8.5 crore were made and transactions of more than ₹200 crore were conducted.

Refex Group's Response

Refex Group has stated that it is fully cooperating with the authorities and that business operations remain unaffected. The company has assured stakeholders that it will continue to adhere to legal compliance, ethical conduct, and regulatory transparency.

Impact on Share Price

The recent crash has pushed Refex Industries' share price down by 27% in December, extending the decline for a second consecutive month. This has contributed to a 47% drop year-to-date, making it the worst annual performance since 2011.

Refex Industries, once a multibagger small-cap stock, is now on track to post its worst annual performance in over a decade. Investors are advised to exercise caution and consult with certified experts before making any investment decisions.

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