Corporate Governance Probe: MCA Investigates Hero MotoCorp and MG Motor India, Targets June Conclusion

The Ministry of Corporate Affairs (MCA) is expediting its investigation into Hero MotoCorp and MG Motor India for corporate governance breaches, aiming to conclude the probe by June.

• Hero MotoCorp Investigation:
   – The MCA initiated an investigation in June 2023 to examine the alleged diversion of funds by Hero MotoCorp.
   – The probe also includes an examination of the ownership structure following an inquiry by the income tax department, which conducted searches in March 2022 for alleged tax evasion.
   – The Enforcement Directorate (ED) is scrutinizing Hero MotoCorp, and assets worth Rs 24.95 crore belonging to Pawan Kant Munjal, the chairman and CEO, were seized in a money-laundering investigation on November 10.

• MG Motor India Investigation:
   – MG Motor India, partly owned by Chinese SAIC Motor, is among 665 Chinese companies under MCA scrutiny.
   – The investigation focuses on alleged audit irregularities, discrepancies in account books, and related party transactions.
   – The scrutiny follows findings of corporate governance breaches in a 2022 Registrar of Companies case.
   – MG Motor India received a government notice inquiring about the reasons for losses in FY20, its first year of operations in India.
   – Despite the investigation, MG Motor India recorded an 18% boost in retail sales in 2023, with a significant portion in the electric vehicle segment.

• Current Status:
   – MCA aims to complete the investigations into both companies by June.
   – MG Motor India has cooperated with authorities, responding to a query in early January and providing relevant information.
   – The company received no further queries since then.

In summary, the MCA is actively addressing corporate governance concerns in Hero MotoCorp and MG Motor India, with investigations covering financial discrepancies, fund diversion, and ownership structures. The timeline for completion is set for June, and both companies have been responsive to inquiries.