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Probe Revealed No Irregularity Over Auditor Resignation, Stock Trading, Says Vakrangee

A probe by the Ministry of Corporate Affairs into the accounts and operations of Vakrangee Ltd. has found no irregularity in matters pertaining to the resignation of its auditor, abnormal trading in the company’s stock, among other issues, the financial services provider said in an exchange filing today.

The company, however, said it has received some observations from the ministry, for which it has been asked to provide explanation.

Matters on which the ministry issued observations:

  • Process of disposal of computers, including computer peripherals, during FY2016-17.
  • Disclosures requirement with respect to financials as per schedule III.
  • Funds from franchisee to be considered as deposits or not as per section 76.
  • Amount planned for CSR (corporate social responsibility) activities remaining unspent.

The ministry had sought an inspection of books of accounts for three financial years under powers granted by the Companies Act, 2013, the company had said in September last year. The probe, Vakrangee then said, will include the resignation of its auditor Price Waterhouse Co, tax reports for the last five years, its number of branches and deposits. The investigation came after Vakrangee shares crashed over 93 percent last year till September, prompting investors to doubt its accounting and business practices.

Matters where the ministry found no irregularities in its preliminary findings:

  • Income tax assessment order and tax audit report for the last five years.
  • Details regarding bullion and jewellery business.
  • Shareholding structure.

The number of Vakrangee Kendras (centres) in India, a subject matter of the MCA probe as per company’s earlier filing found no mention in its latest filing. Vakrangee had over 45,000 such centres, according to its FY18 annual report.