Shree Cement falls on reports of tax ‘evasion‘
Shree Cement falls on reports of tax ‘evasion’
Introduction : The stock market witnessed notable movements on Monday, with Shree Cement experiencing a significant decline due to allegations of tax evasion. On the other hand, the Adani Group announced its growth plans and secured funding for data centre expansion. This article provides an explanation of these developments, focusing on Shree Cement’s stock decline and the Adani Group’s strategies for profit growth and data centre expansion.
Shree Cement: Stock Decline Amidst Tax Evasion Allegations : Shree Cement, one of the prominent players in the cement industry in North India, saw its shares decline by up to 10% during Monday’s trading session. The stock touched a low of Rs 22,605.60, reflecting investor concerns related to allegations of tax evasion. Reports emerged on Saturday, stating that the company was alleged to have evaded taxes amounting to Rs 23,000 crore. The investigation into tax evasion was conducted at Shree Cement’s offices located in Beawar, Jaipur, Chittorgarh, and Ajmer in Rajasthan. According to the reports, this case is considered one of the largest tax evasions in the country, with an alleged misappropriation of Rs 1,200-1,400 crore annually through tax evasion.
In response to these allegations, Shree Cement issued a clarification to the stock exchanges, stating that the investigation is still ongoing. The company dismissed speculative media reports as incorrect and one-sided. However, the market sentiment was negatively impacted, resulting in the stock closing down by 5.59% at Rs 23,740.
Adani Group: Profit Growth Targets and Data Centre Expansion: The Adani Group, a conglomerate with interests in various sectors, including airports, energy, cement, renewables, transportation, logistics, power, and transmission, has set ambitious goals for profit growth. The group aims for a 20% year-on-year increase in pre-tax profits to reach ₹90,000 crore EBITDA within the next 2-3 years. This growth plan reflects the group’s focus on diversification and expansion across its diverse business portfolio.
To regain investor trust and reduce overall leverage, the Adani Group has initiated a prepayment program, resulting in the repayment of loans worth $2.65 billion. This proactive approach demonstrates the group’s commitment to addressing concerns raised by a negative report from a US short seller. By reducing leverage and improving financial stability, the Adani Group aims to strengthen its position in the market and enhance investor confidence.
In addition to profit growth initiatives, the Adani Group has secured funding for data centre expansion through its joint venture, AdaniConneX. The joint venture, in collaboration with data centre operator EdgeConneX, has raised $213 million from lenders to establish two data centres with a combined capacity of 67 MW in India. One data centre with a capacity of 50 MW will be set up in Delhi, while the other, with a capacity of 17 MW in Phase I, will be established in Chennai. This expansion into the data centre sector aligns with the growing demand for digital infrastructure in the country and presents new avenues for revenue generation for the Adani Group.
Conclusion: The developments in the stock market, including the decline of Shree Cement’s shares amidst tax evasion allegations and the Adani Group’s profit growth targets and data centre expansion plans, reflect the changing dynamics and investor sentiment in these companies. The allegations against Shree Cement have raised concerns among investors, resulting in a decline in the stock price. Conversely, the Adani Group’s proactive measures, including loan repayments and data centre expansion, demonstrate their strategic approach to achieve profit growth and diversify their business interests. These developments highlight the ongoing dynamics and opportunities within the Indian stock market.
