New Delhi: Investors were left stunned on Friday as the shares of Refex Industries, once considered a multibagger stock, plunged 20% to ₹254.90, hitting their lowest level since August 2024. The sharp fall came after an Income Tax Department raid on Refex Group and its subsidiaries unearthed evidence of massive tax evasion, shell companies, and fictitious transactions.
According to department sources, the raids were conducted on December 9, covering Refex Group’s offices and associated entities. Preliminary findings indicate tax evasion of over ₹1,000 crore, along with ₹250 crore in unexplained investments linked to a Swiss pharmaceutical company.
Fake Purchases and Coal Contracts Under Scrutiny
As per the department’s report, the company allegedly recorded fake purchases worth ₹1,112 crore, mostly linked to coal supply and ash-handling contracts. Investigators suspect that the company created bogus invoices and inflated expenses to evade taxes.
An official stated, “Significant irregularities were found in the company’s books and invoices. Many of these transactions were routed through interconnected shell companies, raising red flags about fund diversion and tax manipulation.”
Shell Companies in Driver’s Name, ₹200 Crore in Dubious Transactions
Investigations revealed that Refex Group’s promoter had set up multiple shell companies in the name of his driver and other employees. These entities allegedly handled ₹8.5 crore in cash deposits and over ₹200 crore in financial transactions. The tax department suspects these activities fall under money laundering and large-scale tax evasion.
Officials also uncovered that Refex Group received ₹382.68 crore in equity investments from 53 individuals and entities. Among them, 15 investors never filed income tax returns, while 37 failed to disclose such investments in their filings. Investigators believe many of these “investors” were employees or associates of the promoters, and that the funds originated from undisclosed sources.
Company Responds: ‘Fully Cooperating with the Probe’
In a statement following the raids, Refex Group said, “We are fully cooperating with the Income Tax Department. Our business operations continue unaffected, and we remain committed to transparency and compliance. We urge investors not to believe in market speculation.”
However, market experts say that the allegations of tax evasion and fake shell firms have severely undermined investor confidence, triggering heavy sell-offs on the bourses.
Stock Down 27% in December, 47% in One Year
After Friday’s plunge, Refex Industries’ shares have fallen 27% in December alone. This marks the second consecutive month of decline, and the stock is now down 47% year-to-date, its worst performance since 2011.
Analysts believe the ongoing probe and uncertainty around its findings have cast a shadow on the company’s outlook. Investors are now waiting for audited financial reports and compliance updates to assess the company’s actual financial health.
From Multibagger to Crisis Stock
Over the last five years, Refex Industries had delivered a staggering 1,038% return, earning its reputation as a multibagger. The company operates in coal, fly ash handling, and solar energy segments. But the tax probe and revelations of dubious financial activity have raised serious questions about its corporate governance.
Market watchers note, “Such incidents not only shake investor trust but also damage the credibility of the broader corporate ecosystem. It’s a reminder of the urgent need for stronger financial oversight and regulatory enforcement.”
