Alkem Laboratories Shares Plunge 12% Amid Allegations of Substantial Tax Evasion

26 Feb 2024 , 01:58 PM

On February 26, shares of Alkem Laboratories plummeted by 12% in trading following reports of substantial tax evasion by the pharmaceutical giant discovered during an investigation by the Income Tax Department.

At 1:55 pm, Alkem Labs’ shares were trading at ₹5007 on the NSE, 7.63% down from previous close.

Last September, the Income Tax Department initiated surveys on Alkem Laboratories’ offices and premises after receiving intelligence indicating significant tax evasion by the company. The investigation progressed with the recording of statements from relevant officials and scrutiny of data and balance sheets by the Income Tax Department over subsequent months.

Sources indicate that the Income Tax Department found that Alkem Laboratories allegedly made bogus and excessive deductions for its manufacturing units in Sikkim, with the purported value of such deductions claimed to exceed ₹1,000 Crore. Numerous deductions were reportedly claimed under various special sections like 80-IC, according to sources within the firm.

Further investigations by the Income Tax Department revealed that Alkem Laboratories had been making payments to doctors and medical practitioners in exchange for prescriptions of their company-manufactured drugs. The investigation uncovered payments totaling hundreds of Crores made to doctors by Alkem Laboratories. Sources also suggest that the probe findings may result in significant penalties for Alkem Laboratories.