Manpasand Beverages Posts Loss In 2018-19 Due To An Exceptional Item

Manpasand Beverages Ltd. reported a loss for the financial year 2018-19 on the back of an exceptional item in the quarter ended March.

The troubled fruit juice maker’s loss for FY19 was Rs 592 crore compared with a profit of Rs 100 crore in the previous fiscal, the firm said in notes to its financial accounts, adding that the impairment due to the exceptional item was Rs 573 crore in the March quarter. The exceptional item pertained to capital advances, trade receivables and credit notes issued by the company, it said.

The MangoSip maker’s revenue contracted 33 percent to Rs 636 crore in FY19. Revenue for the quarter and year ended March 2019 is net of goods and services tax and hence isn’t comparable with the previous periods, the company said.

That comes after Batliboi & Purohit became the third auditor of the company to step down since May 2018. Batliboi & Purohit had resigned as its statutory auditor, citing its inability to audit because of lack of cooperation from the firm.

The audit firm was appointed after Mehra Goel & Co. quit as auditor on Aug. 2 citing several discrepancies in the company’s financial statements. In May 2018, Deloitte Haskins & Sells had resigned stating that the company wasn’t sharing “significant information”.

Manpasand Beverages had delayed its earnings after auditor resignations, allegations of fraud, the arrest of its promoter and chief financial officer, the market regulator’s caution on incorrect and late disclosure, and differences between its promoter and independent directors.

While the company named Bagaria & Co LLP as its new auditor on Oct. 26, 2019, the appointment is subject to shareholders’ approval in an upcoming annual general meeting, the date for which wasn’t specified in the financial account.

Manpasand Beverages mentioned in its notes the following factors that disrupted operations after May 2019, leading to higher attrition of employees:

• The company is consolidating its network to large channel partners who will, in turn, manage and operate it. This was disrupted by negative market forces, aggressive competition and claims towards damages/expired life.
• Operations and distribution network was disturbed due to GST searches and investigation, among various other foul plays from negative forces. The company has, however, paid Rs 18 crore under protest to secure bail from judicial custody of its officials.
• The company also faced hostile takeover from Finquest Financial Solutions Pvt. Ltd. The attempt to acquire promoter shareholding has been stayed by National Company Law Tribunal.

Other issues highlighted in company notes:

• The provisional allotment of leasehold land has been cancelled and, hence, the management has reassessed implementation of pending capital projects. The capital commitment amounts to Rs 202 crore and the company has decided not to pursue these projects till further feasibility.
• Capital advances amounting to Rs 268.81 crore have been provisioned towards capital advances as an exceptional item.
• Further Rs 118 crore was provided against trade receivables.
• Rs 177 crore of this exceptional item was pertaining to the credit note issued by the company to its customers pertaining to the period prior to December 2018.
• The company has also paid Rs 1.25 crore to chairman and managing director and Rs 26 lakh to a whole-time director, in excess of the remuneration allowed as per the Companies Act.
• A special resolution is to be passed by the members in ensuing AGM for waiver of recovery of remuneration.
• It is to be noted that these above matters are also highlighted by the auditor, Bagaria & Co LLP, by way of ‘Emphasis of Matter’ and their opinion isn’t modified with respect to these matters.

On Monday, Manpasand Beverages shares fell 4.86 percent to Rs 13.70 apiece on the BSE while the benchmark Nifty 50 gained 0.13 percent to end the day at 11,937.50 points.