India’s Ministry of Corporate Affairs has ordered an investigation to assess Hero MotoCorp’s relationship with a third-party vendor in a case related to alleged diversion of funds, two government sources told Reuters on Thursday.
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, said the two sources, which are privy to the internal government directive.
Hero MotoCorp, India’s largest manufacturer of motorcycles, said in a statement to Reuters that it had not received any communication from the government and could not comment.
“We will provide all information, if and when it is sought from us by any regulatory authority,” the spokesperson said.
The ministry did not immediately respond to a Reuter’s emailed request for comment.
Shares of Hero were down as much as 4.2% in Thursday afternoon trade.
The internal government order follows a preliminary inquiry conducted by India’s Registrar of Companies, the two sources said.
The case was seen fit for a further formal investigation in the “public interest”, they said.
The Ministry of Corporate Affairs, under legal provisions, now has powers to record statements of company officials and ask for documents to conduct an investigation.
Separately, Hero MotoCorp was under the scrutiny of India’s income tax authorities last year.
The company last year said tax inspectors visited its offices and the home of CEO Pawan Munjal as part of a “routine inquiry”.
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