Vadodara-based beverages maker, Manpasand Beverages Limited (MBL) is rolling downhill with its top management landing behind the bars for alleged goods and service tax (GST) fraud followed by a series of resignations from independent directors over the past two days.

The company also cancelled its Board Meeting scheduled for Tuesday.

Manpasand shares hit lower circuit for the second straight day on Tuesday. After the close on Friday at Rs 110 with a 5-per cent gain, Manpasand shares corrected by 40 per cent in the past two days to close at Rs 70.40 on Bombay Stock Exchange (BSE).

Also read:Manpasand Beverages MD, two others held for GST fraud

The sleuths of the Central Goods and Services Tax (CGST) Commissionerate Vadodara -II on Friday arrested the Managing Director (MD) of the company Abhishek Singh, Chief Financial Officer (CFO) Paresh Thakkar and one Harshvardhan Singh said to be the brother of Singh on charges of GST fraud of Rs 40 crore.

Following the arrest of the promoter and senior officials, at least four of the eight directors resigned with immediate effect from the company's Board citing mainly the GST crackdown on the Company top brass as the reason for their exits.

Non-executive director, Vishal Sood was first to resign on May 24 due to search from GST department. The others who followed the suit included Dhruv Agrawal and Milind Babar - both independent directors resigned on Sunday and Tuesday respectively.

Food industry expert and independent director on MBL board, Bharat Vyas had resigned with effect from May 20 citing "pre-occupation", while the company had received his resignation on May 26, a regulatory filing revealed.

A statement from the CGST released on Friday, it was said that the multi-locational searches were conducted on various premises of MBL on May 23. This was followed by a huge racket of creating fake/dummy units for availing fraudulent credit and committing tax evasion of Rs 40 crore involving turnover of approx Rs 300 crore had surfaced.

The investigation revealed a network of over 30 units, that were either fake or bogus, located in various parts of the country. These were used for committing fraud by availing illegal credit. The investigation regarding ultimate beneficiary of the fraud and web of shell companies is under progress, it revealed.

MBL had reported a market capitalisation of Rs 1200 crore and reported total standalone income of Rs 985 crore for the year 2017-18 with a net profit of about Rs 100 crore.

In May 2018, Manpasand had come under scanner after the sudden exit of its statutory auditors Deloitte Haskins & Sells India amid suspicious turn of events. It was understood that the Auditors were upset by the MBL management over lack of transparency and cooperation in sharing crucial data on Company's capital expenditure and revenues.

This was perceived as a serious corporate governance crisis when an auditor resigns halfway through an audit - that too just before finalisation of the annual financial accounts.

MBL stock prices tumbled from its 52-week peak of Rs 458.75 on May 25, 2018 to a low of Rs 52 in February 6, 2019.

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