Tax Probe Triggers 20% Crash in Refex Industries Stock

New Delhi | December 12, 2025:

Investors were jolted on Friday after shares of Refex Industries, once hailed as a multibagger, crashed 20 percent to ₹254.90, marking their lowest level since August 2024. The sharp decline followed Income Tax Department raids on the Refex Group and its subsidiaries, which reportedly uncovered evidence of large-scale tax evasion, shell companies and fictitious financial transactions.

According to officials familiar with the probe, searches conducted on December 9 revealed alleged tax evasion exceeding ₹1,000 crore, along with nearly ₹250 crore in unexplained investments linked to a Swiss pharmaceutical entity. The findings triggered panic selling on the bourses, wiping out a significant portion of the company’s market capitalisation within hours.

Investigators suspect that Refex Industries recorded fake purchases worth ₹1,112 crore, largely tied to coal supply and ash-handling contracts. Officials said bogus invoices were allegedly generated to inflate expenses and suppress taxable income. Several of these transactions were routed through interconnected entities, raising red flags about fund diversion and accounting manipulation.

The probe further revealed that multiple shell companies were allegedly created in the names of the promoter’s driver and other employees. These entities reportedly handled over ₹8.5 crore in cash deposits and facilitated financial transactions exceeding ₹200 crore. Tax officials believe these structures were used to layer funds and disguise undisclosed income.

Authorities also flagged ₹382.68 crore in equity investments received by Refex Industries from 53 individuals and entities. Of these, at least 15 investors reportedly never filed income tax returns, while 37 failed to disclose their investments. Investigators suspect that many of these investors were either employees or close associates of the promoters, with funds originating from undisclosed sources.

In a statement issued after the raids, the company said it was fully cooperating with the Income Tax Department and that its business operations remained unaffected. Refex urged investors not to be swayed by speculation, asserting its commitment to regulatory compliance. However, market analysts said the scale of alleged irregularities has severely dented investor confidence.

Following the latest crash, Refex Industries’ stock has fallen 27 percent in December alone and is down 47 percent over the past year, marking its worst performance in more than a decade. Analysts noted that until clarity emerges from audited financial disclosures, volatility is likely to persist.

Over the past five years, Refex Industries had delivered returns of over 1,000 percent, earning its reputation as a multibagger. But the unfolding tax investigation has raised serious questions about corporate governance, internal controls and financial transparency. Experts say cases involving alleged shell entities, inflated expenses and undisclosed investments typically require deep forensic scrutiny through auditing services in india to establish the true financial position of companies under investigation.

Market participants are now closely watching regulatory filings, audit outcomes and official confirmations from tax authorities to assess whether the company can regain credibility or faces prolonged regulatory and legal headwinds.