Just a day after the Rs 609 crore initial public offer (IPO) of PC Jewellers (PCJ) closed for subscription on December 12, the residence of key board of directors, offices and showrooms of the company were searched by the Directorate of Revenue Intelligence (DRI).
The search operations were conducted at PCJ's registered office located at Karol Bagh and corporate office in Preet Vihar in New Delhi. Also, seven of the company's 30 showrooms located at New Delhi, Noida and Gurgoan were searched for three days by DRI.
The search operations were conducted with regard to PCJ's import of jewellery from Thailand. The DRI has alleged that custom duty payment was wrongly calculated by PCJ on the import. While the company has not received any written notice from DRI or any other regulatory authority in connection with this matter, it has paid Rs 8.5 crore 'in protest' to the customs commissioner in New Delhi with regard to case, PCJ said in a public notice today and gave out details of the search. The notice was given as a modification to its IPO red herring prospectus.
India has signed a Free Trade Agreement (FTA) with Thailand this year under which jewellery imports attract a mere 1 per cent tax. Comparatively, jewellery imports from other countries attract 4 per cent custom duty.
"There can be no assurance that we will not be subject to further investigation and/or other action by the DRI or any other regulatory authority in this matter. As of the date hereof, we are continuing to conduct normal business operations at our registered office, corporate office, all our showrooms and our manufacturing facilities," PCJ said in the notice.
PCJ IPO had received bids for 26.32 million shares against 45.1 million shares offered as the issue was subscribed by 6.85 times. The IPO price band was set at Rs 125-Rs 135. There was a discount of Rs 5 for retail bidders and eligible employees. Retail category of the IPO was subscribed by 1.68 times. PCJ is promoted by Padam Chand Gupta and Balram Garg and is involved in manufacturing, retail and export of jewellery. PCJ had said it will use the IPO proceeds to expand its showroom network in the country.
The list f PCJ's anchor investors include DB International (Asia) and Reliance Vision Fund, DVI Fund Mauritius, Stichting Pensioenfonds ABP, Mirae Asset India Bluechip Equity Master Investment Trust, Goldman Sachs India Fund, HSBC Tax Saver Equity Fund, Birla Sunlife Midcap Fund and Tata AIA Life Insurance Company.
