Software services provider Fourth Dimension Solutions Ltd. has filed an insolvency petition to recover Rs 429 crore from imaging and printing equipment maker Ricoh India Ltd. for a cancelled contract.
Fourth Dimension filed its plea on Monday under the Insolvency and Bankruptcy Code in the National Company Law Tribunal. The petition will come up for hearing on September 20.
The dispute stems from an IT contract Ricoh India terminated. Fourth Dimension claimed damages and payment for goods and services provided, its petition said. Despite reminders and notices, Ricoh didn't pay up, it said in reply to BloombergQuint’s emailed queries.
Ricoh India rejected Fourth Dimension’s demand, calling it “frivolous and not tenable”. The company said it’s the IT firm that owed it Rs 340 crore. “Ricoh India will be pursuing the matter through legal representation,” it said in a BSE filing. The entire amount due is good and recoverable, it said.
Ricoh India didn’t respond to BloombergQuint’s emailed queries.
The insolvency petition comes a year after Ricoh India said it had managed to clean up its books after its auditor found accounting irregularities. Ricoh India had suspended some of its top officials and even lodged a police complaint, which was then discarded by Economic Offences Wing.
Its promoters, Japan’s Ricoh, then infused Rs 1,123 crore to make good the losses, but ran into legal trouble. Trading in its shares was suspended after BSE Ltd. challenged the recapitalisation process. Moreover, the infusion didn’t completely clean up its books.
There is still uncertainty regarding financial statements, according to BSR and Co., statutory auditors of Ricoh India. Total receivables of Rs 268 crore are outstanding for more than a year and the auditors aren’t sure if the amount can be recovered.
Inventory worth Rs 214 crore could not be verified or is lying with a third party without any documents to support it, according to the audit report. Moreover, most of it is old and slow moving, the auditors said.
Sales Tax Demand
Ricoh India received fresh sales tax demand worth Rs 310 crore for the year ended March. That’s compares with the company’s Rs 769 crore market capitalisation.