Tax officials raid Zetwerk’s offices, founders’ homes suspecting tax evasion

Mumbai: Several offices of Zetwerk Manufacturing, a contract maker of consumer and capital goods, have been raided by income tax officials on suspicion of tax evasion. The homes of its founders, and that of Prayank Swaroop, a director on the company’s board, were also searched.

“Cash has been seized and the searches are now going beyond offices to Zetwerk’s warehouses, too,” said a person with knowledge of the development.

Last December, Zetwerk raised about $210 million in a funding round led by US-based Greenoaks Capital, with participation from Iconiq Strategic Partners and others.

Emailed queries sent to the spokespersons of Zetwerk and Accel, an investor in the company, did not elicit an immediate response.

Zetwerk is the latest in a series of startups, including BharatPe, Paytm Payments Bank, Trell and Infra.Market that are facing investigations. On March 16 we reported that Infra.Market, a business-to-business construction materials startup, was facing a probe for allegedly not paying taxes after its offices in several cities were raided.

In August 2021, Zetwerk raised $150 million in a round led by D1 Capital Partners and joined the unicorn club at a valuation of $1.33 billion. The four-year-old company had raised a seed round in 2018.

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In an interview with ET in August 2021, Zetwerk CEO Amrit Acharya told ET that the company had turned Ebitda positive and was likely to grow 4x in the current financial year to clock a revenue of around Rs 3,500 crore. Ebitda refers to a company’s earnings before interest, tax, depreciation and amortisation.

Founded in 2018 by Acharya, Srinath Ramakkrushnan, Rahul Sharma and Vishal Chaudhary, Zetwerk helps small and medium enterprises translate their digital designs into physical products. It operates in more than 25 industry segments.

The company has entered new manufacturing categories such as consumer goods, apparel, defence, space and aerospace. Around 85% of its business is concentrated around the Indian market and the international business contributes around 10% to its order book.

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