Ministry Of Corporate Affairs To Probe Vakrangee’s Accounts, Operations
The Ministry of Corporate Affairs ordered probe into accounts and operations of Vakrangee Ltd., a financial services provider that lost nearly all its value this year amid concerns about investments and resignation of its auditor.
The ministry has sought an inspection of books of accounts for three financial years under powers granted by the Companies Act, 2013, the company said in its exchange filing. The probe, it said, will include the resignation of auditors, tax reports for the last five years, its number of branches and deposits. The company said that it would fully cooperate during the inspection.
Shares of Vakrangee have tumbled 93 percent so far this year, led by reports of alleged manipulation of PC Jewellers Ltd.’s stock price and then the resignation of its auditor citing insufficient information. That came after a 4,400 percent surge in its shares in seven years that had turned the company’s co-founder Dinesh Nandwana and wife Jyoti Nandwana, who together own nearly 42 percent, into billionaires briefly.
PC Jewellers Investment Saga
Vakrangee’s slide began in February after the Mumbai Mirror reported that the market regulator was investigating the company for alleged share price manipulation of PC Jewellers. Vakrangee, according to exchange data, had on Jan. 26 bought 20 lakh shares of PC Jeweller, which has since lost nearly 90 percent of its value.
Dinesh Nandwana, however, denied any stock price manipulation and said the Securities Exchange Board of India didn’t find any wrongdoing. He said Vakrangee made investments from the treasury fund.
But its shares again came under pressure after its auditor Price Waterhouse & Co resigned on April 27 before signing on the company’s annual accounts, citing insufficient information during the audit. PW said it asked the management for “information on several matters pertaining to election books, bullion and jewellery businesses”, but the company’s response was inadequate.
Vakrangee said it had provided all the information and was fully compliant with Indian accounting standards. It, however, didn’t explain why the auditor found the company’s responses inadequate and contradictory.
Then, after announcing earnings for the year ended March, Vakrangee cancelled its share buyback and dividend worth Rs 1,250 crore it had announced in February. Instead, according to its filings, the cash would be use for setting up ATMs at kendras.
The company, which provides financial and government services, said it will upgrade its 45,000 outlets and increase the count to 75,000 by 2020.
Investors didn’t buy that, and its shares continued to slide. It fell 3.7 percent to Rs 28.35 apiece on Friday compared with a peak price of Rs 420 apiece in December last year.