Hero MotoCorp stock falls over 3.5% as report says MCA orders probe into firm

Two-wheeler major Hero MotoCorp Ltd's shares fell over 3.5% on Thursday after a report said Ministry Of Corporate Affairs has initiated probe against the company.

MCA has issued investigation orders under Section 210 (1)(c) & 216 of Companies Act, reported CNBC TV18. On Thursday, Hero MotoCorp's scrip on BSE closed trading 3.6% lower at Rs 2,823.

Hero MotoCorp, India's largest manufacturer of motorcycles, said in a statement that it had not received any communication from the government and could not comment.

"We will provide all information, if and when it is sought from us by any regulatory authority," the spokesperson said.

Ministry of Corporate Affairs has ordered an investigation to assess Hero MotoCorp's relationship with a third-party vendor in a case related to alleged diversion of funds, Reuters reported quoting sources.

The investigation has been ordered in the "public interest" to probe the ownership structure of Hero MotoCorp and whether it controlled the third-party vendor, said the sources, who are privy to the internal government directive.

The internal government order follows a preliminary inquiry conducted by Registrar of Companies, the two sources told Reuters.

The case was seen fit for a further formal investigation in the "public interest", they said.

The Ministry of Corporate Affairs, under legal provisions, now has powers to record statements of company officials and ask for documents to conduct an investigation.

Separately, Hero MotoCorp was under the scrutiny of income tax authorities last year.

The company last year said tax inspectors visited its offices and the home of CEO Pawan Munjal as part of a "routine inquiry".

With inputs from Reuters