THE CEO of automotive giant Hero MotoCorp (Pawan Munjal) has come under scrutiny from the authorities this week, after his home was raided on Tuesday, with authorities also swooping on Hero offices in Delhi and Gurugram.
Enforcement Directorate officers are charged with investigating money laundering and violations of foreign exchange and bringing those at fault to justice. The strike on Hero’s CEO and its offices comes just a short time after the Directorate of Revenue Intelligence (DRI) apprehended one of Munjal’s aides who was in possession of an amount of undeclared foreign currency.
The latest news will bring back bad memories for the Indian brand, which saw similar investigations take place at its premises in March 2022. Then the authorities visited 25 premises relating to Hero, again it included a visit to the chairman’s home, and on that occasion, it was to look into alleged tax evasion.
The X440 is the first Harley-Davidson-branded bike from Hero
This latest investigation has hit Hero where it hurts, with the Indian brand’s share price plummeting by four percent and looking like it will continue to slide. A statement released by the brand confirmed that “Officials from the Enforcement Directorate today visited two of our offices in Delhi and Gurugram and the residence of our Executive Chairman Dr. Pawan Munjal. We continue to extend all cooperation to the agency.”
Hero MotoCorp (formally known as Hero Honda) was established in 1984, and as its previous name suggested, was a joint venture between Hero Cycles of India and Honda. The business focused on low-cost economical bikes and continued in this way until it split with Honda, a process that began in 2010.
The timing of this latest investigation isn’t great for the Indian brand, as it’s right in the midst of launching one of its most headline-grabbing models to date, the Harley-Davidson branded X440. It’s not known if the investigation will affect the roll-out and delivery of these new machines.
This is an updated page originally published in June 2023, the updated article can be found below.
Hero Motocorp, India's largest producer of motorcycles, has become the subject of a probe ordered by the Indian Ministry of Corporate Affairs.
The probe has been ordered by the Indian Ministry of Corporate Affairs to investigate the relationship between Hero Motocorp and a third party vendor in a case regarding an alleged diversion of funds, Reuters reports.
The probe, which was ordered after a preliminary inquiry was conducted by the Indian Registrar of Companies, seeks to understand the ownership structure of Hero Motocorp, and determine whether it controlled the vendor.
‘Public interest’ has been given as the justification for the ordering of the investigation of Hero’s relationship with the aforementioned third party vendor, such is the scale of Hero’s presence in its home country, where it is the largest producer of motorcycles. Such a position of strength has allowed Hero to form partnerships with other brands which are better established outside of India, and especially in the West, such as Harley-Davidson, with whom Hero has collaborated on the recently-revealed Harley-Davidson X440.
The probe from the Ministry of Corporate Affairs comes in the year after Hero was investigated by the Indian tax authorities, in 2022. At the time, Hero said the visit of the tax authorities to its offices, and to the home of Hero Motocorp CEO Pawan Munjal, was part of a “routine inquiry.”
At the time of writing (21 June 2023), Hero Motocorp has not released a statement regarding the probe.
