The gaming sector is in disarray, with several big companies facing show-cause notice. Nazara Technologies is the most recent addition to the list. The Director General of GST Intelligence, Mumbai, served the gaming behemoth with a show-cause notice indicating a tax demand of ₹2.83 crore. The company is expected to respond to the show-cause notice within the specified timelines.
The latest show-cause notice comes days after casino and online gaming firm Delta Corp received notices worth ₹16,822 crore and Dream11 was slapped with a notice amounting to ₹1,221 crore from the Directorate General of GST Intelligence for dues in GST payments. Prior to this, Play Games24x7 and Head Digital Works were issued with notices worth ₹20,000 crore & ₹ 5,000 crore.
The show-cause notice had serious implications on the share of Nazara Technologies. The company’s shares opened lower at ₹826 against its previous closing price of ₹827.55. The stock dropped to ₹816.05 in opening trade but recovered to rise 1% to ₹839.65 apiece on the National Stock Exchange.
The company announced earlier this month a ₹100 crore raise from Zerodha’s Kamath brothers. On September 4, the company’s board approved a preferential allotment of equity shares to Nithin and Nikhil Kamath-owned Kamath Associates and NKSquared in order to raise upto ₹ 100 crore.
The company intended to issue 14,00,560 equity shares with a face value of ₹4 each at a price of ₹ 714 per equity share, for a total of ₹ 99.99 crore to M/s Kamath Associates and M/s NKSquared. Kamath Associates and NKSquared are partnership firms led by Nikhil Kamath and Nithin Kamath.
The fresh funds will be used in funding requirements and growth objectives of the company such as making strategic acquisitions and investments in various companies, meeting growth and funding requirements based on the business opportunities across the subsidiaries, it said in a regulatory filing.
The Rekha Rakesh Jhunjhunwala-backed company, founded in 1999, is the first gaming company to be listed on stock exchanges. It operates in multiple countries, including India, Africa, and North America.
The firm recorded a 31% year-on-year increase in net profit to ₹ 20.9 crore for the fiscal quarter ending June, up from t ₹ 15.9 crore in the previous fiscal quarter. Revenue increased 14% to t ₹ 254.4 crore in Q1 FY24 from t ₹223.1 crore the previous quarter. EBITDA increased by 10% to 33.1 crore.
Credit: Fortune India