Trading in particular stocks or even indices are halted by the bourse when a particular scrip hits a lower or upper circuit breaker. That, the stock hit a low circuit reflects investor sentiment with the stock.
As many as 35.71 lakh shares exchanged hands on the BSE on Monday reflecting the investor sentiment. This, after news reports said that the Managing Director and Chief Financial Officer of the company were arrested.
News reports said that a search by a Commissioner of Central GST and Customs was undertaken at various premises of the company. Soon, it emerged that the MD and CEO were arrested. The company confirmed in its filings that the seizure proceedings were indeed conducted. A further inquiry was also conducted on May 24 at the GST Bhavan office in Mumbai.
A CGST statement, released on Friday revealed that searches were conducted on various premises of the company on May 23, following which a racket of creating fake/dummy units for availing fraudulent credit and committing tax evasion of Rs 40 crore involving turnover of approximate Rs 300 crore had surfaced.
The investigations revealed a nationwide network of 30 dummy companies that were used by Manpasand Beverages for claiming illegal credit. The agencies were still ascertaining the exact beneficiaries of such dubious deals.
On Monday, Manpasand revealed in its filings that two directors had resigned. The company said Bharat Vyas, a director resigned due to "pre-occupation" while Dhruv Agrawal had resigned owing to "GST search". Bharat Vyas is an ex-Managing Director of Gujarat Cooperative Milk Marketing Federation, the dairy company that sells the Amul brand. Vyas was inducted on the Manpasand board last year.
So far, the total tally of Directors having resigned from the company stands at three.
The company on Saturday had also informed that Vishal Sood, Non-Executive Director of the Company had tendered resignation from the post of Director of the Company with immediate effect. This filing also added "Abhishek Singh, Whole Time Director, Paresh Thakkar, Chief Financial Officer of the company and (Singh's brother) Harshvardhan Singh, are under judicial custody of authority from May 24, 2019. The company is contesting these allegations in accordance with the due process of law."
Surprisingly, this is the second time in two years that the scrip has touched a lower circuit. This suggests that the company selling popular brands such as MangoSip and Fruits Up is not alien to challenges of mis-governance. The stock had hit a lower 20 per cent circuit during May 2018. Its auditor Deloitte Haskins and Sells India had quit the audit process midway citing transparency issues back then.
So far, the company has maintained, "Considering the present status of the case, estimated impact on the company and amount involved is not identifiable till the outcome in the matter."
The company's board of directors, meanwhile were expected to announce results for the fourth quarter on 28th May 2019.
With Inputs from IANS