Manpasand Beverages locked at 20% lower circuit after arrest of MD, CEO

Manpasand Beverages shares were locked at 20 percent lower circuit at Rs 88 on May 27 after the top management was arrested by the Central Goods and Services Tax (GST) Commissionerate Vadodara-II sleuths for an alleged GST fraud.

CGST Vadodara-II said in a statement that the company's Managing Director Abhishek Singh, his brother Harshvardhan Singh and the Chief Financial Officer Paresh Thakkar have been arrested after a raid on May 23.

"Multi-locational searches were conducted on various premises of Manpasand Beverages on May 23. The searches resulted into an unveiling of a huge racket of creating fake units for availing fraudulent credit and committing tax evasion of Rs 40 crore and involving turnover of Rs 300 crore approximately," said the CGST statement.

The CGST statement had said that the investigation unearthed a network of more than 30 fake units in various parts of the country that were used to commit fraud by availing illegal credit.

CGST Vadodara-II also said that the investigation regarding the ultimate beneficiary of the fraud and the web of shell companies is under progress.

"The company is contesting these allegations in accordance with the due process of law. Considering the present status of the case estimated impact on the company and amount involved is not identifiable till the outcome in the matter," said Manpasand Beverages in a clarification to the exchanges.

However, this is not the first time that the fruit juice maker is in the news. It had clocked 20 percent lower circuit in May 2018 after their statutory auditors quit abruptly.

In May 2018, the company's statutory auditor Deloitte Haskins & Sells had resigned ahead of the financial meeting for declaring the financial results. Deloitte Haskins & Sells had said that Manpasand Beverages failed to provide them with "significant information" on the financial results for 2017-18.

Following this, Religare Broking had also suspended coverage on the stock, citing a lack of clarity on the resignation of its auditors. It also flagged concerns on lack of disclosures provided by the firm with respect to this issue.

After the exit of the auditor, Manpasand Beverages had assured investors that the situation involving Deloitte was 'unfortunate' but the decision was taken keeping in mind shareholders’ interest.

The stock has, in the last one year, plunged 80 percent from Rs 355 level.