Men looks up at an electronic screen displaying stock figures at the Bombay Stock Exchange (BSE) in Mumbai. (Photographer: Prashanth Vishwanathan/Bloomberg)

Promoters Haven’t Sold Any Pledged Shares, Infibeam Avenues MD Says

Infibeam Avenues Ltd. said none of its promoters have sold any of their pledged shares after the online retailer of iPhone and iPad lost 71 percent of its market value over a WhatsApp message.

“As a company what we can do is be very proactive and filing with the stock exchanges that all these rumours are baseless,” Managing Director Vishal Mehta told BloombergQuint. “The company has complied with all regulatory practices.”

Infibeam lost 71 percent of its market value on Friday after a WhatsApp message circulating among traders raised concerns about the company’s accounting practices.

The WhatsApp message alleged, among other things, that the company had given interest-free and unsecured loans to its units, Bloomberg reported quoting people familiar with the matter.

Here’s what Mehta had to say about the multiple rumours.

Have the promoters or the promoter group liquidated any of their pledged shares in Infibeam Avenue?

Historically, we have been buyers of the stock. Neither promoters nor the promoter group has sold or liquidated a single share. As far as investors are concerned, they are with us.

What is the company doing to assuage investor concerns?

We’ve been in touch with our investors. We will of course try to provide more and be transparent in terms of information sharing. We’ve got a very mixed feeling because the company’s performance has been the strongest. On the other side, we’ve had a terrible day for our investors. We are very concerned about rumours spreading around through communication channels like WhatsApp, which has not only created social problems in the country, but also started creating economic problems. It’s important to trace the source of these messages through regulatory channels.

Did you purchase any kind of software from a company called MMS Solutions? One of the notes that have come out in editorial publications mentions that this company has no employees and no expenses. So, it is difficult to believe that they have provided software services worth Rs 50 crore.

The very short answer is no. This was again another rumour.

Have you had any dealings with a promoter-related entity with cash from Infibeam where you have bought a solution or an asset from any promoter-related entity in the last two or three years?

All these things are completely baseless. The answer is no and we do not typically address rumours.

What sort of growth prospects do you see for the company?

If you look at our numbers, in terms of net revenue, 98 percent of it comes from services that we offer. In that specifically we offer digital payments in web services. So only 2 percent comes from buying and selling of products.

If you look into the digital payments space, we processed Rs 21,000 crore in financial year 2017-18. Year-over-year we have doubled. We processed Rs 12,000 crore in financial year 2016-17. This year in the first quarter itself we have processed Rs 10,000 crore. We are at a run-rate of Rs 40,000 crore. This is a business where we make just a small cut of the transaction.

The number of transactions in the online world is increasing and if you look at the participants, all major hotels, travelling websites are participating.

Given that the stock’s valuation is at one-fourth of what it was at in the beginning of the year, are you looking at buying in at these levels?

Yes we would be but we will talk to the exchanges about that directly. We would make sure that we are aligned from the long term and historically also we have been buyers of the stock.

Who are your auditors? Have your auditors changed in the last couple of years? Why?

Last year, KPMG has moved on and now we have got EY and Shah Kapadia & Associates. At that point we felt that it was the right opportunity for us. They have been with us for 4-5 years. They continued to provide assistance to us. We have also talked to the exchange about it in terms of many opportunities that the company wants to evaluate. But at that point we felt that there was opportunity to have good auditors. We don’t want to continue and we decided that, from their perspective also, that they will provide assistance in other matters and it was something that they have provided in terms of position.

Watch the full interview here