Arvind Gupta v/s Aksh Optifibre
Article published as on Monday, 6th July, 2020 at 10:00 a.m.
Monday
6th July, 10:00 am.
In this
case study we will see for the first time where an independent director Arvind Gupta
blew the whistle and raised a red flag, Instead
of resigning from the board.
An article was published in Moneycontrol on 4th
July alleging a 600 crore scam in Aksh optifibre.
Let’s understand this story of Arvind Gupta v/s Aksh
Optifibre.
Incidence
in short: Arvind Gupta is the founder
& trustee of the ‘indian investors
protection council’, he is also the same person who blew the whistle in
ICICI bank and Videocon case he was appointed as independent director (DIN: 00560901) on the
board of Aksh optifibre as on 13th February 2020, and on 26th
June he sent various letters to concerned authorities regarding wrongdoings and
malpractices happening in the company.
His allegations were that through ‘Gold plating of
imports’ that is through various related party transactions profits
were artificially reduced in the company, and the beneficiary were the
promoters, although related party transactions these were not disclosed on exchanges
leading to wrongful gains by the promoters.
Article also elaborates on the companies which
were involved in this process. Arvind gupta also presented evidences to the
authorities. And demanded forensic audit of the firm.
For details one needs to go through these articles
and circulars.
4th July, 2020 Moneycontrol article (click
here)
4th July, 2020 clarification by company
(click
here)
17th September, 2019 circular by
company (click
here)
Study of
promoter and the company:
The promoters of the company are the Choudhari
family holding 27.95% share, few promoters were banned from transacting in capital
markets by the SEBI vide its order dated 28th June 2019, matter relating
to GDR.
Apart from this, in last one year several top
managerial and board members left the company which again was a red flag.
Here are
few directors from the list. (Just
for reference)
23/7/2019 Mr. Amrit Nath resigned
9/8/2019 Mr. Gauri Shankar resigned
9/8/2019 Ms. Devika Raveendran resigned
21/9/2019 Mr. B.R. Rakhecha resigned
20/2/2020 Mr. Dhan Raj resigned
30/3/2020 Mr. Ramgopal Yadavalli resigned
I did researched the promoter on MCA website,
Dr. Kailash
Shantilal chaudhari, (DIN:
00023824) he is not serving nor has
he served on the board of any other listed companies, if he had served on any
other board we should be aware and alert of that company too.
Here is the quarterly results of Aksh optifibre (Q4FY2020)
Now this statement of profit and loss showing loss in excess of 236 crores under exception item is the biggest red flag.
Are
these statement audited?
Nowhere do we see auditors report and auditors
stamp or signature indicating these are unaudited figures while giving the
impression of submission of audited figures.
My understanding
of the case:
The clarification dated 4th July, 2020
to the exchanges says that,
post stakeholder
relation committee meeting on 3rd July which was held for adoption of
external auditor report and expressing concern about other independent director
(Mr. Arvind Gupta), instantly on 4th July complain of Mr. Gupta has
been released by the media.
Company is trying to bring its attention on the
credibility of Mr.Gupta while deviating from answering important questions concerning
its own governing practices.
(Also
why would stakeholder committee meet for adoption of external auditor report?
and why not audit committee? how is this company being run?)
Conclusion:
Arvind Gupta being an independent director is
fulfilling his duty and responsibility, he blew the whistle with submitting
supporting evidences and proofs.
On the other hand Aksh optifibre instead of
answering questions related to its governance practices is trying to misguide
people by questioning credibility of Mr.Arvind Gupta.
I don’t know Mr.Gupta personally so I can’t say he
is honest or not, but that does not matter in this case, as an investor anyone would
be concerned with serious issues and allegations which the company is trying to
avoid answering.
These things were going on for years and years says
Mr.Gupta, even if things are out and investigation is done it will be too late,
Similar frauds by promoters of Tara jewels was
done, this is another story among many others.
Investors
should definitely avoid investing in it and those already invested must look
for an exit immediately.
Friday, 3rd July. NSE: 6.35 Rs. (Market
cap: 103.3123 crores)
ConversionConversion EmoticonEmoticon