Outgoing executive alleges irregularities; company denies
Acropetal Technologies, a BSE-listed software services company, has run into rough weather. The Bangalore-based firm let go around 300 persons last year and has been defaulting on salaries and payments to suppliers, according to company insiders.
Moreover, the company has sacked its US-based Chief Executive Officer, who has now accused the company of ‘financial irregularities’ and ‘lack of transparency’, a claim denied by Chairman and Managing Director Ravikumar D.
Letter to SEBI
Subbu Iyer, who was the CEO of Acropetal’s US unit till November 12, told Business Line that he has sent a letter to the Securities Exchange Board of India and the Ministry of Corporate Affairs alleging that he has been asked to leave ‘for standing up to corrupt practices and demand for governance’.
He further alleges that the company’s financial reports are cooked up and that it has not been paying dividends to shareholders. Terming the company to be ‘worse than Satyam’, Iyer said: “It has defaulted in paying salaries, PF, loans and dividends; has pending regulatory and criminal investigations going on,” he said.
When contacted Ravikumar said that these allegations were being made from a ‘disgruntled former employee’ with the intention of maligning the company. “He was the CEO of the parent-listed entity at the time of declaring this dividend and also signed the financials for the fiscal 2011-12 – The published annual report is a proof of this statement. If he has any issues with the financials, he would not have signed the financials in the first place,” said Ravikumar.
Iyer said he had raised objections on the company’s US finances in the past. However, he did not have authority to make financial decisions as he was not a board member, he said.
Iyer, who has over 20 years of experience working for companies such as Steria, Wipro and Tata Consultancy Services, had joined the company as CEO in November 2011. Earlier this year, he was relieved of this responsibility and transferred to the US as CEO of the company’s US unit.
Ravikumar, however, confirmed that 300 have been laid off due to some acquisitions not bearing fruit.
“We had planned and executed our expansions through acquisitions and product / solutions mode during the year 2011-12 which did not go the way we really wanted those to go. This put financial strain in the system due to which we had to lay off some of the product development team during the last financial year,” Ravikumar said in response to Business Line query.
In 2012, the company had announced that it had completed the acquisitions of Mindriver Systems and Kinfotech. The company had also invested in systems integrator firm Virtus Tech.
In May this year, the company had informed the stock exchanges that it has decided to dispose of up to 30,000 equity shares of Kinfotech as a result of which it would cease to be a subsidiary.
“We have been paying our salaries on time to our existing resources. There were some delays to our vendors owing to the same reason and we have agreed to settle them in stages and the same is being done promptly,” said Ravikumar.