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Infibeam Gets Shareholder Backing To Oust Auditor

Infibeam alleged that its auditor—SRBC & Co. LLP of EY—breached regulations by sharing unpublished financial information.

Virtually all—99.987 percent—Infibeam shareholders supported the ouster of SRBC & Co. LLP, a network firm of EY—one of the big four auditors across the world. (Photographer Chris Ratcliffe/Bloomberg)
Virtually all—99.987 percent—Infibeam shareholders supported the ouster of SRBC & Co. LLP, a network firm of EY—one of the big four auditors across the world. (Photographer Chris Ratcliffe/Bloomberg)

Institutional shareholders supported Infibeam Avenues Ltd.’s resolution to vote out its auditor, which had questioned the company’s accounting practices, for an alleged information breach.

At the extraordinary general meeting on Thursday, Infibeam shareholders successfully passed a resolution for removing the joint statutory auditor, according to the online retailer’s exchange filing. Virtually all—99.987 percent—of the total votes polled supported the ouster of SRBC & Co. LLP, a network firm of EY—one of the big four auditors across the world.

Of the institutional investors holding 4.3 crore shares, or 6.5 percent, those representing 1.4 crore shares voted. All of them, including foreign investors, bank, financial institutions and mutual funds, supported the auditor’s ouster.

Public shareholders also supported the resolution. Investors holding 22.68 crore shares, or 61 percent of the stake in the company, voted. More than 99.9 percent of them voted out SRBC & Co.

Infibeam Gets  Shareholder Backing To Oust Auditor

Infibeam will now have to get final approval from the central government to remove the auditor. The company had accused the auditor of sharing financial information before the earnings are announced. SRBC & Co. has denied any wrongdoing.

Auditors’ Queries

The auditing firms SRBC & Co. and Shah & Taparia had in the earnings for quarter ended December 2018 raised concerns about advances to Infibeam’s subsidiaries and its web development revenue.

  • The first one pertained to Rs 122 crore in advances to Infibeam’s subsidiaries, which used the money to pay vendors. In the absence of adequate information, the auditors said they were “unable to comment on the recoverability of advances and consequential impact” on earnings.
  • The second was about Rs 32 crore revenue from web development and maintenance services. In the absence of details regarding pricing rationale, the auditors said they were unable to comment on its impact on the earnings.

In the financial statement for the quarter ended March, audited by Shah & Taparia, the company said the majority of advances have been settled towards the purpose for which the amount was provided. Infibeam said it provided the complete process review and additional documents regarding the recognition of web development and maintenance services revenue, and the auditor was satisfied.