Shares of Refex Industries Ltd suffered a sharp collapse on Friday, hitting the 20% lower circuit and falling to around ₹254.90,
after explosive disclosures by the Income Tax Department revealed alleged tax evasion exceeding ₹1,000 crore.
The sell-off erased investor confidence in a single session and pushed the stock to its lowest level since August 2024, leaving shareholders stunned.
The crash came amid reports that tax authorities also uncovered ₹250 crore in unexplained overseas investments linked to the Refex Group and its associates.
Adding further pressure on the stock, market regulator SEBI imposed penalties totaling ₹35 lakh on the company’s top leadership in a separate insider trading case.
What Triggered the Market Meltdown
The steep fall in Refex Industries’ share price followed detailed media reports about large-scale tax raids conducted by the Income Tax Department starting 9 December.
The searches reportedly covered not only Refex Industries, the group’s flagship company, but also a wide network of entities connected to the promoters.
According to sources quoted in DT Next, the department carried out coordinated searches across:
- Refex Industries offices
- Financiers and intermediaries
- Suspected hawala operators
- Jewellery businesses
- Entities believed to be linked to the promoter group
Investigators reportedly uncovered ₹1,112 crore in suspected bogus purchases, largely related to coal procurement and ash-handling contracts, which form a key part of Refex’s business operations.
Equity Infusion, Benami Links, and Overseas Investments
One of the most serious findings involved equity contributions worth ₹382.68 crore, allegedly routed through 53 individuals and entities. According to reports, several of these contributors were either non-filers or had failed to disclose the transactions in their income tax returns.
What raised further red flags for authorities was that many of these individuals were reportedly employees or close associates of the promoters, strengthening suspicions that benami channels were used to introduce unaccounted funds into the company.
Investigators also seized documents pointing to:
- A US$30 million investment in Swiss pharmaceutical firm Astro Viz
- Around ₹115 crore invested in DN Energy Ltd
Officials are now examining the source of these funds and whether they were diverted or layered through multiple entities, according to a report by the Times of India.
Shell Companies and Personal Spending Under Scanner
The investigation further revealed allegations that shell companies were created in the name of the promoter’s driver, which were allegedly used to:
- Route ₹8.5 crore in cash deposits
- Facilitate transactions exceeding ₹200 crore
Authorities are also scrutinising the promoter’s personal expenditure, including:
- A private jet worth ₹37 crore
- Luxury cars valued at ₹10 crore
- High-end watches worth ₹4 crore
These expenses are being examined to determine whether they were funded through undisclosed income.
Financiers and Hawala Operators Also Probed
Parallel raids were reportedly conducted on financier Rajesh Surana, where officials found evidence suggesting ₹312 crore was advanced to Aradhya Infra and subsequently routed to other entities.
Additionally, hawala operators suspected of channeling over ₹10 crore through unauthorised routes are under investigation. The department believes these channels may have been used to move funds outside the formal banking system.
So far, authorities say they have identified more than ₹1,000 crore in unaccounted income and seized approximately ₹70 crore in cash, gold, and silver. The investigation is still ongoing, and officials have indicated that further disclosures may follow.
Company Responds: ‘Operations Remain Unaffected’
In multiple filings to the stock exchanges and public statements, Refex Industries confirmed that search operations are underway and stated that it is fully cooperating with the authorities.
The company emphasised that:
- Business operations remain normal and unaffected
- All required information is being provided to investigators
- Stakeholders should rely only on official disclosures
Refex also warned investors and the public against unverified claims circulating on social media, calling many of them misleading and speculative.
Despite these assurances, the market reaction remained extremely negative, reflecting investor anxiety over governance, financial transparency, and regulatory risks.
SEBI Slaps ₹35 Lakh Penalty in Insider Trading Case
Adding to the pressure, SEBI separately penalised Refex Industries’ top management in an insider trading case related to events from 2023.
SEBI imposed:
- ₹10 lakh penalty on Anil Jain, Chairman and Managing Director
- ₹25 lakh joint penalty on Kamlesh Jain and the Jain Family Trust
The case relates to trading in Refex Industries shares ahead of the announcement of strong financial results for the quarter ended 31 March 2023.
How SEBI Built Its Case
Refex had reported a sharp jump in income on both a quarterly and yearly basis, which led to a significant surge in its share price after the results were announced on 18 May 2023.
SEBI ruled that the financial results qualified as Unpublished Price-Sensitive Information (UPSI) from 29 March 2023 until public disclosure.
According to the regulator:
- Anil Jain was actively involved in management and performance review meetings
- He had advance knowledge of the strong results
- He communicated this UPSI to his close associate Kamlesh Jain
Call data records showed conversations between them on 7 April and 13 May 2023, shortly before trades were executed by the Jain Family Trust.
Unlawful Gains Identified
SEBI found that the Jain Family Trust:
- Purchased 13,473 shares on 15 and 16 May 2023
- Sold all shares on 19 and 22 May 2023, immediately after results were announced
- Earned unlawful profits of ₹12.33 lakh
The regulator also noted that during the UPSI period, the Trust traded only in Refex Industries shares, despite normally trading across multiple stocks—strengthening the insider trading charge.
SEBI’s Final Order
After reviewing all evidence, SEBI concluded that:
- Anil Jain violated Regulation 3(1) of the PIT Regulations and Section 12A(e) of the SEBI Act
- Kamlesh Jain and the Jain Family Trust violated Regulation 4(1) and Sections 12A(d) and (e)
Accordingly, SEBI imposed monetary penalties totaling ₹35 lakh.
Investor Outlook: A Stock Under Heavy Cloud
With tax investigations ongoing, large-scale financial irregularities alleged, and regulatory penalties already imposed, Refex Industries is facing one of the most turbulent phases in its history.
Investors are now closely watching:
- Further findings from the Income Tax Department
- Any additional regulatory action
- The company’s ability to maintain operational stability
- Possible governance reforms or leadership responses
For now, the stock remains under severe pressure as the market digests the seriousness of the allegations and awaits clarity on the final outcome of the investigations.