POLYCAB

Following the announcement of Ultratech Cement entering the wires and cable segment on February 25th, Polycab and KEI Industries experienced a sharp fall. Similarly, players in the wire and cable segment showed a negative impact today due to the news of Adani Enterprises entering the space. The speaker suggests studying past events to see if recovery follows such falls.

The Income Tax department has found credible evidence of unaccounted cash sales and other financial irregularities within a group engaged in wires and cables manufacturing, but has not explicitly named the company in their press release, creating ambiguity in the market. The speaker suggests this lack of direct naming is a dramatic aspect of the situation.

Retail individual investors should avoid companies where corporate governance is questioned, especially in light of potential tax evasion allegations.

If institutional investors (DIIs and FIIs) strictly adhere to ESG norms, the allegations against Polycab could lead to a significant sell-off as they may divest shares of companies with governance concerns.