shares extended fall for a second day, down 20 percent at Rs 11.80 on Wednesday following shocking revelation that liabilities and advances worth Rs 4,400 crore were understated by the company - a move which prompted the Ministry of Corporate Affairs
to order a probe right away. Amit Tandon, founder and managing director of proxy advisory firm IiAS, spoke about the development.
“We are in the part of the market where the flow of the money has stopped between various entities and once the music stops then some of the people are going to find themselves without any chair to sit on,” Tandon said on Wednesday.
“My sense at the moment is that they have taken a first look at what it is, they have pieced together what makes sense to them at this stage but once you start digging in, you are going to find something more,” he added.
“These are the things, which have been unearthed without a forensic audit being put in place. Once you do that, I suspect you will find a little bit more than that. How much more is difficult to say whether it is another Rs 300 crore or Rs 3,000 crore. Who knows at this stage,” said Tandon.
When asked how significant is the role of an auditor in this, he replied, “In 2016 they have appointed Chaturvedi & Shah who resigned within a year. Then in 2017, a local firm was appointed and clearly, things must have been a little bit amiss because in 2018 they have brought in a joint auditor, which was an SRBC firm affiliated with the E&Y group. What the disclosures to the stock exchanges have said that this was the firm which worked with them to reconcile some of the accounts and figure out what is going on. Clearly the fact that you had auditors moving was that none of them were comfortable with what was going on but clearly, none of them raised a red flag early enough till the last change which has happened.”
“The role of the auditors over the last few years needs to be looked at a little bit more closely, it needs to be scrutinised in terms of what did they do, when did they find out that the numbers are not adding up,” he said.