[UPDATE August 4, 2023: India's Enforcement Directorate issued a statement regarding its activities with regard to the Hero MotoCorp offices it searched, as well as the home of Hero CEO Pawan Munjal.

In the statement, it announced that it recovered assets including foreign currency, cash, and jewelry worth approximately 25 crore (over $3 million), along with hard disks mobile phones, documents, and other evidence for its investigation, which it says is ongoing.

The statement further alleges that employees of a company called Salt Experience and Management Private Limited (SEMPL) "had illegally exported Foreign Currency [sic] equivalent to INR 54 Crore (over $6.5 million) approximately to various countries during the period 2014-2015 to 2018-2019 which was ultimately used for personal expenses of P K Munjal."

According to the company's LinkedIn presence, SEMPL lists itself as "an experiential marketing organization."]

Original piece follows.

On August 1, 2023, officials from India’s Enforcement Directorate, which is an arm of the Ministry of Finance, searched three properties related to Hero MotoCorp. Two of the visits were conducted at Hero offices in Delhi and Gurugram, while the third took place at the home of chairman, managing director, and Hero CEO Pawan Munjal.  

The searches were conducted by the ED under the auspices of the Prevention of Money Laundering Act, according to official reports. The investigation of Hero and Munjal is related to a complaint alleged against a person close to Munjal, made by India’s Directorate of Revenue Intelligence. According to the complaint, that person was investigated for “carrying undeclared foreign currency.” 

Hero MotoCorp issued an official statement later in the day, which said, “Officials from the Enforcement Directorate today visited two of our offices in Delhi and Gurugram and the residence of our Executive Chairman Dr. Pawan Munjal. We continue to extend all cooperation to the agency.”  

According to local news reports, financial documents and electronic data were retrieved by the officials during the course of the search and taken away for further review. Shares in Hero MotoCorp promptly fell over four percent during the day’s trading hours after reports of the raids broke across Indian media. 

This marks Hero’s third separate investigation in the past two years that has been conducted by a government agency. In June 2023, India’s Ministry of Corporate Affairs opened an investigation into an alleged diversion of funds involving a third-party vendor. Prior to that, in 2022, an income tax-related investigation also led to officials paying visits to both Hero offices, as well as to Chairman Munjal’s home. 

It’s unclear what, if anything, may come of this investigation. It’s also unclear if or how it may relate to either or both of the previous investigations. As and when further information is revealed going forward, we will of course be sure to keep you updated. 

Hero’s latest motorcycle release is the Harley-Davidson X440, which it is producing in partnership with the American motorcycle company. It announced at the end of July that it would temporarily close pre-bookings for the bike on August 3, 2023, as it starts to ramp up production to deliver the first bikes to customers. While pre-bookings should open again at a date yet to be determined in the future, the price is expected to rise at that time. 

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