Tax officials raid Zetwerk offices as founders’ homes suspect tax evasion

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Mumbai: The Income Tax (IT) Department is carrying out searches at premises linked to Zetwerk Manufacturing, a consumer goods and capital goods contractor, over allegations of suspected tax evasion. Search operations that began on Wednesday will continue for a few more days, a source said. Apart from official premises, the residence of Zetwerk founders and even directors of the company’s board of directors were also raided, people familiar with the development added.

“The raids are based on information being worked on by the Bengaluru unit of the IT department. Some incriminating material has been gathered and is currently being investigated. The quantum and modus operandi would be clear once the raids are over,” said said a private official. Development. Accel India, D1 Capital Partners, Greenoaks Capital, Lightspeed Venture Partners, Sequoia Capital are among the Zetwerk investors.

“The ongoing search is now moving beyond the offices to Zetwerk’s warehouses,” said one of the people, who did not wish to be identified.

In an email response to ET’s questions, a company spokesperson said, “Zetwerk adheres to very high standards of compliance, regulation and country law. We fully comply with all requirements applicable tax and legal requirements and remain committed to cooperating with the authorities. The requests in your mail are speculative in nature and we deny them.”

The ongoing investigation comes at a time when questions have been raised about compliance and corporate governance issues at some of the best-funded startups that have grown at breakneck speed. According to a March 17 ET report, tax authorities also raided several offices of Infra.Market backed by Accel and Tiger Global in India. ET also reported on a survey conducted by EY at Trell, an influencer-led social commerce startup.

Founded in 2018 by Amrit Acharya, Srinath Ramakkrushnan, Rahul Sharma and Vishal Chaudhary, Zetwerk Manufacturing helps small and medium businesses translate their digital designs into physical products. It operates in more than 25 industry segments. In December last year, Zetwerk Manufacturing raised approximately $210 million and before that, in August, the company had raised $150 million led by D1 Capital Partners at a valuation of $1.33 billion.

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In an interview with ET in August last year, Acharya, CEO of Zetwerk, said the company had turned Ebitda positive and was likely to quadruple in 2021-22 to generate revenue of around Rs 3,500 crores. Ebitda refers to a company’s earnings before interest, taxes, depreciation and amortization.

The company is focused on a strong unit economy and long-term growth, Acharya said, adding profitability was an important milestone for the company.

The company entered new manufacturing categories such as consumer goods, apparel, defense, space and aerospace.

About 85% of its activity is concentrated around the Indian market and the international market contributes about 10% to its order book.

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