Delta Corp shares are under scrutiny as the company's Q3 profits experience a significant decline of 59%. The casino and gaming services company reported net sales of Rs 231.74 crore for the quarter, a drop from Rs 273.37 crore in the same period last year. Revenue from gaming operations witnessed a YoY decrease from Rs 221.95 crore to Rs 181.54 crore, while online skill gaming operations saw a decline from Rs 43.06 crore to Rs 39.13 crore. On a positive note, hospitality revenue increased to Rs 13.74 crore from Rs 12.67 crore YoY.
The company and its subsidiaries received show cause notices from the Directorate General of GST Intelligence, Hyderabad, in September 2023. These notices allege a short payment of Goods and Service Tax (GST) amounting to Rs 16,822.98 crores under the CGST Act, 2017 and Goa SGST Act, 2017, covering the period from July 1, 2017, to March 31, 2022. Another subsidiary received a notice for alleged short payment of GST amounting to Rs 6,384.32 crore for the period from July 1, 2017, to November 30, 2022, from the Director General of GST Intelligence, Kolkata.
Delta Corp responded, stating that the demands made by authorities were based on the gross bet or face value of all games played at its casinos or online platform. The company highlighted that this issue has been an industry-wide concern, with representations made to the government. Delta Corp and its subsidiaries have filed Writ petitions and obtained stay orders from respective High Courts.
In a firm stance, Delta Corp asserted that the tax demands are arbitrary and contrary to the provisions of the law. The company, confident in its legal position, expressed its intention to pursue all available legal remedies to challenge the tax demands and related proceedings.
Addressing the goodwill carried by the holding company, Delta Corp mentioned an amount of Rs 355.33 crore recognized in the consolidated financial results. Despite the Q3 challenges, the company believes that, given their strong defense against the show cause notices, no provision for impairment is currently necessary for goodwill and other assets related to the subsidiaries in the consolidated financial results until the GST matter is effectively concluded.
