Shareholders of Refex Industries were taken aback as the stock hit the 20% lower circuit in Friday’s session, December 12, falling to ₹254.90 apiece, the lowest level since August 2024, following disclosures by the Income Tax Department, which said it had detected tax evasion of over ₹1,000 crore by the Refex Group and its associates, along with unexplained investments of ₹250 crore in a Swiss pharmaceutical company.
In a statement, the department said it conducted the raid on Tuesday, December 9. The searches and investigations include the jewellery business allegedly linked to Refex Industries Limited, the flagship company of the Refex Group, financiers, hawala operators, and promoters.
Income Tax Department officials said bogus purchases worth ₹1,112 crore were detected during the search operations. This was mostly related to coal procurement and ash-handling contracts.
They also 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 the contributors are employees or associates of the promoters. Due to this, it is suspected that the entire investment is an investment made through an anonymous entity without any reason.
The Income Tax Department says 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 made.
Refex Group says it is cooperating fully with authorities
In a statement, Refex Group said the search process is underway and that the organisation, along with its subsidiaries and employees, is fully cooperating with the authorities to ensure smooth and transparent proceedings. The company added that business operations remain unaffected.
“Refex Group has always adhered to legal compliance, ethical conduct, and regulatory transparency, and will continue to do so. We request stakeholders and the public to refrain from circulating or relying on speculative or unauthenticated information unless officially confirmed by competent authorities,” the company stated.
Refex Industries share price tanks 27% in December
Today’s sharp crash has pushed shares down 27% in December so far, extending the decline for a second consecutive month and contributing to a 47% drop year-to-date.
The multibagger small-cap stock, after delivering positive returns for six straight years, is now on track to post its worst annual performance since 2011, when it plunged 79%.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
