Reported before the listing of Sima garments suspected of tax evasion 3 billion
Risenma Apparel is on the verge of entering the capital market, a move that could once again bring immense wealth to Semir. However, just before the critical meeting, reporters received insider information suggesting that the company was involved in tax evasion amounting to over 3 billion yuan between 2003 and 2009. Currently, 12 different tax authorities across China are investigating the allegations.
The news came as the China Securities Regulatory Commission (CSRC) announced that it would hold a meeting on January 24 to review the initial public offering (IPO) application of Zhejiang Senma Fashion Co., Ltd., known as Semir Apparel. The company aims to raise 2.056 billion yuan by issuing 70 million shares, with proceeds intended for marketing and IT infrastructure development.
Despite its growing reputation, especially after being featured in the movie "Iron Man 2" with actress Scarlett Johansson, Semir Apparel now faces serious scrutiny. A report from an anonymous source claims that the company has been evading taxes through unaccounted cash transactions and underreporting sales data. This includes both wholesale and retail operations, with allegations of using affiliated stores and companies to hide revenue.
According to the prospectus, Semir Apparel reported revenues of 1.822 billion yuan, 3.322 billion yuan, and 4.25 billion yuan in 2007, 2008, and 2009, respectively. Net profits during this period were 150 million, 443 million, and 696 million yuan. However, the internal financial data appears to contradict these figures, raising questions about the accuracy of the disclosures.
The company, originally known as Wenzhou Senma Children's Clothing, was established in 2002 and restructured into a joint-stock company in 2007. In 2008, it acquired the casual apparel business from Semigroup, which significantly expanded its operations.
The investigation involves 12 tax authorities across multiple provinces, including Jiangxi, Hebei, Chongqing, Guizhou, Ningxia, Hainan, Guangxi, Tianjin, Zhejiang, Huizhou, Shanxi, and Shandong. These regions are also where Semir Apparel operates a large number of retail outlets—over 5,800 in 2007, decreasing to 2,903 by 2009.
In response to the allegations, the Chongqing State Taxation Bureau confirmed that it is conducting an internal review and has initiated city-wide inspections. Other tax departments have also acknowledged receiving the reports and are taking them seriously, though no official conclusions have been made yet.
As the IPO process moves forward, the ongoing tax investigations cast a shadow over Semir Apparel’s future, raising concerns about transparency and accountability. The outcome of these investigations will likely play a key role in determining whether the company can successfully enter the stock market.
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