Nazara gets ₹2.83 cr tax demand notice from GST Intelligence

Nazara Technologies has received a show-cause notice stating a tax demand of ₹2.83 crore from the Director General of GST Intelligence, Mumbai.

The online gaming company says it will be filing its response to the said show-cause notice within the prescribed timelines.

This comes days after casino and online gaming firm Delta Corp received notices worth ₹16,822 crore from the Directorate General of GST Intelligence for payment of shortfall tax.

Shares of Nazara Technologies opened lower at ₹826 against its previous closing price of ₹827.55. The stock soon fell to ₹816.05 in opening trade but recovered sharply to rise 1% to ₹839.65 apiece on the National Stock Exchange (NSE).

Earlier this month, Nazara Technologies announced a ₹100 crore fundraise from Zerodha's Kamath brothers. On September 4, the company's board approved preferential allotment of equity shares to raise up to ₹100 crore from Nithin Kamath and Nikhil Kamath-owned Kamath Associates and NKSquared.

The company proposed to issue 14,00,560 equity shares of face value of ₹4 each at a price of ₹714 per equity share aggregating to ₹99.99 crore proportionately to M/s Kamath Associates & M/s NKSquared. Kamath Associates and NKSquared are partnership firms represented by their partners Nikhil Kamath and Nithin Kamath.

The infusion of fresh funds will be utilised to invest in funding requirements and growth objectives of the company including for 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.

"Nikhil Kamath symbolises success in India's tech arena, and this fundraise holds immense value for us at Nazara as we continue to build a diversified gaming platform in India. Beyond the funds raised, his investment stands as a resounding vote of confidence in Nazara," said Nitish Mittersain, chief executive officer of Nazara Technologies.

Commenting on the investment in Nazara, Nikhil Kamath, partner of Kamath Associates and NKSquared, said, "Gaming in India is poised for strong growth in the years to come and Nazara has built a well-diversified, profitable gaming platform well suited to take advantage of opportunities in the years ahead. We look forward to supporting Nitish and his team in achieving their growth aspirations for Nazara."

Formed in 1999, the Rekha Rakesh Jhunjhunwala-backed firm is the first gaming company to be listed on the stock exchanges. It has a presence in India, Africa, and North America.

The company reported a 31% year-on-year rise in net profit at ₹20.9 crore for the quarter ended June compared with ₹15.9 crore in the corresponding quarter last fiscal. Revenue rose 14% to ₹254.4 crore in Q1 FY24 from ₹223.1 crore in the previous corresponding quarter. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 10% to ₹33.1 crore.