Page 76 - Forbes - Asia (July - August 2018)

FORBES ASIA
BEST UNDER A BILLION — AUDIT CRISIS

Numbers Crunch

BUB alums are hit as Indian auditors are spooked.

BY ANURADHA RAGHUNATHAN
isted companies in India was done. Manpasand’s stock—which After the resignation, Vakrangee re-
are in the throes of an audit crashed 70% in the weeks after the sponded in a statement to the exchange
crisis. In the first half of resignation—is still yo-yoing. Founder that it “has provided all the informa-
2018, auditors at 30 listed Dhirendra Singh, with a 44% stake, tion with respect to business and afairs
Lentities quit midterm. Two feels that pain. of the company to the Auditor and the
former Best Under A Billion com- Deloitte said it was “unable to com- Audit committee.” Vakrangee then ap-
panies faced abrupt auditor resigna- ment on client-specific matters” as it pointed a new auditor and announced
tions in the last few months—sinking was “bound by confidentiality obliga- year-end results in June of $1 billion
their stocks and founder fortunes. tions.” In the second instance, Price in revenues—up from $618 million last
Deloitte Haskins & Sells—which Waterhouse resigned as auditor of year—and net of $105 million.
had audited fruit juice maker Man- tech services firm Vakrangee in April, However, founder Dinesh Nandwana,
pasand Beverages for the last eight citing lack of information about some who debuted on India’s richest last year
years—bailed a few days before a businesses. This was the firm’s first with a net worth of $1.72 billion, saw his
board meeting in May intended for the audit of the Mumbai company, which fortune plunge 85% in recent months.
release of its fiscal year-end results, appeared on BUB in 2015. Vakrangee (Vakrangee’s stock already had taken a
saying in a letter to the board that the provides e-governance, banking, in- hit in February over published rumors
company didn’t provide “significant surance, e-commerce and logistics for of price and volume manipulation. The
information.” rural and semi-urban consumers. company said that they were “completely
Manpasand, which debuted on In its resignation letter, Price baseless and factually incorrect.”)
BUB in 2017, countered to the stock Waterhouse said that it had requested The spotlight is on auditors.
exchanges that “we have been provid- information relating “When an auditor or
ing all required information as and to Vakrangee’s “elec- independent board
when required by them.” The com- tion books” (as part member resigns, it’s
pany further added that “while there of its e-governance a red flag for inves-
could have been some delays” it has segment) and the tors,” says Pranav
“never denied sharing any informa- “bullion and jewel- Haldea, managing
tion with them ever.” Subsequently, lery” business (as director of New Del-
the juice company, which sells pri- part of its e-com- hi’s Prime Database,
marily to rural and semi-urban India, merce business). Manpasand’s Singh saw his fortune which tracks listed
appointed a new auditor and released While the manage- crash after an auditor’s resignation. companies.“They
results in June reporting a 34% uptick ment had responded, the answers were don’t know what to expect, and
in revenues to $151 million and a 36% “inadequate” or “contradicting earlier the market doesn’t like uncertainty ANU RAGHUNATHAN
surge in profits to $15 million for the explanations,” Price Waterhouse said because you don’t know the depth of
year ended March 31. But the damage in its resignation letter to the board. the issue.” F

74 | FORBES ASIA JULY / AUGUST 2018