Auditing major Price Waterhouse has quit audit mandate of technology firm Vakrangee Ltd, flagging concerns to the corporate affairs ministry about the books of accounts, mainly related to its bullion and jewellery business, even as the company denied any irregularities.
The company is also being probed by the Securities and Exchange Board of India (Sebi), which had earlier probed some other entities having traded in Vakrangee shares, about alleged disclosure and corporate governance lapses, regulatory and government officials said.
There were no comments from Vakrangee as well as PwC, which resigned as the statutory auditor of Vakrangee before completing even a year of auditing assignment with the company.
Incorporated in 1990, Vakrangee calls itself a "unique technology driven company focused on building India's largest network of last-mile retail outlets to deliver real-time banking, insurance, e-governance, e-commerce and logistics services to the unserved and under-served rural, semi-urban and urban markets".
For its retail outlets called 'Vakrangee Kendra' and billed as the 'One-stop shop' to avail various services and products, the company had earlier talked to some big jewellers and banks but many of those couldn't fructify.
The company had acquired some shares in PC Jewellers also, which they are believed to have sold already and a proposed tie-up between the two could not be concluded, sources aware of the developments said.
PC Jewellers also didn't reply to queries in this regard.
Vakrangee had earlier announced ambitious plans to setup and manage a total of 75,000 'Vakrangee Kendra' outlets across India by 2020 and covering the presence in all postal codes of the country.
Price Waterhouse was appointed by Vakrangee in September last year. It has reviewed the company's financials till December quarter but the problem cropped up when the auditor started working on the full year accounts and found problems with the company's "election books as well as bullion and jewellery businesses", government and regulatory officials said.
Price Waterhouse has now written to the corporate affairs ministry, expressing its concerns about the company's businesses. Moreover, the accountancy firm informed the ministry that it did not receive any reasonable assurance from Vakrangee, whether its financial statements were free from material misstatements, whether due to fraud or error, officials said.
Before writing to the ministry, the auditing firm had sought information from Vakrangee's management and audit committee about these businesses on several occasions in March but did not receive satisfactory reply. In fact, the reply were "inadequate or contradicting".
This was one of the prime reasons cited by Price Waterhouse for quitting the company.
The absence of "adequate and relevant information and explanations regarding the company's election books, bullion and jewellery businesses," by the firm made Price Waterhouse to withdraw from the audit engagements.
However, Vakrangee has informed the stock exchanges that it has provided all the information with respect to business and affairs of the company to the auditor and the audit committee and "the financial statements present the true and fair view of the state of the affairs of the company".
In February this year, Sebi had imposed a fine of Rs 9.5 lakh on Abhirati Trading for shareholding disclosure lapses in the matter of Vakrangee. The regulator upon suspicion of violation of various provisions had conducted an investigation into the shares of Vakrangee.
At that time, Vakrangee had claimed in a press release that it has received clean chit from Sebi in the matter. The regulatory officials, however, asserted that the company remains under the scanner for possible lapses from the past, while the concerns flagged by PwC are also being looked into now.