Godrej Consumer Products’ shares were down on Monday after its acquisition of a consumer goods business reportedly came under the goods and services tax (GST) scanner.
What Happened: The Directorate General of GST Intelligence (DGGI) is currently investigating a deal where Godrej acquired Raymond’s consumer goods business in April 2023, the Economic Times reported, citing sources.
GST authorities are questioning whether GST should apply to this ₹2,825 crore transaction. DGGI has also sought an explanation from Godrej Consumer Products Ltd (GCPL), the acquirer, and inspected Raymond’s premises in Mumbai.
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Raymond stated that the transaction, a slump sale of the business as a going concern, is not subject to GST. DGGI contends that the deal is subject to 18% GST.
The enforcement body is reviewing documents provided by the company. This investigation follows GCPL’s acquisition of the fast-moving consumer goods company, which includes popular consumer brands.
The business includes popular brands including Park Avenue, KamaSutra and Premium. Raymond’s Consumer Care business reported ₹522 crore in sales for the financial year 2022.
The investigation is ongoing, and further updates may be provided in the future.
Price Action: Godrej Consumer Products’ share price dropped 1.02% to ₹977.20 around noon on Monday.
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