Delta Corp shares in focus as Q3 profit tumbles 59%; what casino co says on tax demand

Shares of Delta Corp Ltd will be in focus on Wednesday morning after the only listed company engaged in the casino (live, electronic and online) gaming industry in India, logged 59.34 per cent year-on-year drop in consolidated net profit at Rs 34.48 crore for the December quarter compared with a net profit of Rs 84.82 crore in the corresponding quarter last year.

Net sales for the quarter came in at Rs 231.74 crore compared with Rs 273.37 crore in the same quarter last year, Delta Corp said. Revenue from gaming operations fell to Rs 181.54 crore from Rs 221.95 crore YoY while that of online skill Gaming operations fell to Rs 39.13 crore from Rs 43.06 crore YoY. Hospitality revenue, however, rose to Rs 13.74 crore from Rs 12.67 crore YoY, the casino and gaming services company said.

The holding company and its two subsidiary companies had in September 2023 received show cause notices from the Directorate General of GST Intelligence, Hyderabad, for alleged short payment of Goods and Service Tax (GST) aggregating Rs 16,822.98 crores under Section 74(1) of the CGST Act, 2017 and Goa SGST Act, 2017 for the period from July 1, 2017 to March 31, 2022.

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Another subsidiary company, Delta Corp said, received show cause notice dated October 28, 2023 for alleged short payment of Goods and Service Tax (GST) aggregating Rs 6,384.32 crore for the period July 1, 2017 to November 30, 2022 from Director General of GST Intelligence, Kolkata .

Delta Corp said the amounts claimed under the notices were inter-alia based on the gross bet or face value of all games played at its casinos or online platform.  "The demands made by the authorities on the gross bet value/ Gross face value as against gross gaming revenue /gross rake amount has been an industry issue and multiple representations have been made by the industry participants to the government in this regard," it said.

Delta Corp said the holding company and subsidiary companies have filed Writ petitions and have obtained stay order from respective High Courts.

"Without prejudice, the Holding Company and its three subsidiaries, based on legal assessment is of the view that all the above notices and the tax demands are arbitrary in nature and contrary to the provisions of law. The companies will pursue all the legal remedies available to them to challenge such tax demands and the related proceedings," it said.

Delta Corp said the holding company carries goodwill, arising on consolidation amounting to Rs 355.33 crore in the consolidated financial results of the holding company, which was recognised in the earlier years.

"Considering the fact that the holding and subsidiary companies have a good ground to defend against the said show cause notices, the Group management believes that until the GST matter gets effectively concluded, no provision for impairment is currently required towards goodwill and other assets related to the three subsidiaries, as reflected in the consolidated financial results," it said.