Brainbees Shares Drop 5% After GST Department Launches Probe

Shares of Brainbees Solutions, the parent entity of kidswear retailer FirstCry, dipped over 5% today (November 7), following news that the Mumbai GST department has launched an investigation into the company’s tax practices.

At 3 PM, the company’s shares were trading at INR 592.85 apiece, 5.26% lower than yesterday’s price. 

In a filing, Brainbees Solutions confirmed that officials from the Mumbai state tax office conducted a search and inspection on November 6 at its Pune headquarters and a warehouse in Maharashtra’s Bhamboli. 

The company stated that the investigation was carried out under sections 67(1) and 67(2) of the Maharashtra GST Act, 2017.

Brainbees assured investors that it is fully cooperating with the GST authorities, providing necessary clarifications, and that the company’s operations remain unaffected by the ongoing probe. 

“We would like to emphasise that the company has always maintained high standards of integrity, corporate governance, and compliance in all aspects of its operations, including the prompt payment of applicable taxes. We remain committed to upholding these standards,” the company said in a statement.

Earlier this year, the company also received show notices from the income tax Department pertaining to ESOP expenses of INR 79.7 Cr for assessment years (AY) 2018-19 to 2021-22.

Founded in 2010 by Supam Maheshwari and Amitava Saha, FirstCry is an omnichannel baby and kids marketplace. It got listed on the BSE and NSE at 34% and 40% premium, respectively, earlier this year in August.

Meanwhile Brainbees Solutions trimmed its consolidated net loss by 31% to INR 75.68 Cr in the first quarter of financial year 2024-25 (Q1 FY25) from INR 110.42 Cr in the year-ago period.

Its operating revenue grew 10% to INR 1,652.07 Cr during the quarter under review from INR 1,496.93 Cr in Q1 FY24.