First, we must compliment Varinder Bansal of CNBC TV18. While all other anchors are busy talking of frivolous issues like cricket and mouthing sweet nothings, he is at the forefront, asking tough questions and demanding answers from managements.
In the case of Ricoh India, Varinder Bansal thundered:
Saga of Ricoh India – an MNC is very disturbing. Management has to come ahead & report results; tell investors why so much delay happening
— Varinder Bansal (@varinder_bansal) March 31, 2016
In an earlier piece, I speculated that something is definitely amiss because Ricoh India had stated that it had appointed an “independent agency” to look into the accounts and had also sent the employees in charge of the accounts “on leave”.
However, it appears that all of us had underestimated the gravity of the situation. We had assumed that the employees being sent on leave are low level staff such as the accountant and the cashier. To everyone’s shock and surprise, the entire top brass comprising of the MD/ CEO, CFO and VP/COO have been sent packing by the Company.
This is revealed in Ricoh India’s latest release:
“Ricoh India Ltd has informed BSE that:
“With respect to the disclosure letter dated March 29, 2016, the Independent Agency, which comprise of an independent law firm and accountants, has been appointed to assist the Audit Committee to better understand certain areas where the auditors had emphasized further review is presently conducting a review and the same is likely to be completed soon.
Name of the officers, who have been requested to take leave with pay during the review process, are:
(i) Mr. Manoj Kumar, the Managing Director and Chief Executive Officer;
(ii) Mr. Arvind Singhal, the Chief Financial Officer; and
(iii) Mr. Anil Saini, the Senior Vice President and Chief Operating Officer.
Name of the officers, who shall discharge the functions on behalf of the officers sent on leave, are:
(i) Mr. A.T. Rajan would be in-charge and discharge the functions of the Chief Executive Officer and the Chief Operating Officer.
(ii) Mr. Bibek Chowdhury would be in-charge and discharge the functions of the Chief Financial Officer.”
It is also significant that an “independent agency” in the form of a firm of Chartered Accountants and a law firm have also been roped in to examine the accounts. This clearly indicates that there are serious implications of corporate fraud suspected.
Prima facie, the sending “on leave” of the top management so that they do not interfere in the investigation implies that the Company suspects their complicity in whatever misfeasance has happened.
Now, in this sorry state of affairs, it would be naïve for anyone to still believe that everything is hunky dory at Ricoh India. Instead, we have to brace ourselves for some gruesome revelations.
It is notable that Manoj Kumar, the MD/ CEO, had in an earlier interview in December 2015 downplayed the delay in furnishing the audited results as a “procedural delay”. He also said that “There are no accounting irregularities and there is nothing wrong with recording of sales”. However, given that he is one of the employees sent by the Company “on leave”, there is not much credibility that can be attached to his statement.
The unfortunate part is that retail investors are now totally trapped. The BSE has reduced the lower circuit limits to 2% from 5%, making any sort of escape impossible.
Ricoh India circuit reduced to 2%…. Slow and Painful death (Halal Certified)
— Amit Anam (@amitanam) April 1, 2016
— Ashish Khokha (@ashishkhokha) March 23, 2016
— RATAN (@SURANARP) April 2, 2016
Meanwhile, the mood at MMB is also somber. Investors appear to have resigned themselves to their fate.
“i am unable to sell ricoh india shares as there are no buyers.kindly guide me what should i do now. Daily 5 percent loss.” sumedha8562 asked pitifully.
“small investor to aisi company me fash jata hai bechne ka moka hi milta” s4,sandip1989 added mournfully.
“sayad aapne jeevan mrityu film nahi dekhi.Dharmendra wali.” ku_ch_1973 said in a philosophical tone.
The entire episode is a shocking blow to our confidence. If we cannot trust a so-called blue chip MNC backed by illustrious stock wizards with our hard-earned money, who can we trust?