Manpasand Beverages shares down 20% on auditor's resignation

Investors get jittery after firm offers no reason for Deloitte's departure, and defers results board meet as well

Shares of Manpasand Beverages slumped, hitting their 20 per cent daily limit on Monday, following surprise resignation of auditor Deloitte Haskins & Sells.
 
The Gujarat-based fruit juice manufacturer on Sunday announced that Deloitte had resigned and it has named Mehra Goel & Co. as its replacement.
 
The company didn’t give a reason for the resignation. Manpasand also postponed the board meeting, scheduled for May 23, to announce its financial results.
 
“We are bound by confidentiality obligations and are unable to comment on client-specific matters,” said Deloitee India in a statement.
 
However, in a letter written by Deloitte to the board of Manpasand Beverages, the auditing firm said “significant information requested by it from the company at various points of time for the purpose of audit of the financial results have not yet been provided.” “The letter further said there has been no further progress with respect to the pending information, evidences and explanations. As such, the auditors would be unable to complete the statutory audit of the financial statements of the company for the year ended March 31, 2018 by May 30, 2018,” the letter said.
 

“As such, the auditors are submitting their resignation as statutory auditors of the company with immediate effect,” it further said.
 
The chain of events spooked investors.
 
Kotak Institutional Equities suspended coverage on the stock and changed its view to ‘cautious’ following the auditor’s resignation.
 
“We lack comfort on rating the company given the lack of disclosure on reasons for the resignation of the earlier auditor,” Kotak analysts Rohit Chordia, Jaykumar Doshi and Aniket Sethi wrote in a note. The brokerage said it would review its stance once the company publishes the annual results.
 
Manpasand Beverages, which made stock market debut in July 2015, saw its stock go up 60 per cent last year. Prior to Monday’s 20 per cent fall, the stock was down three per cent year to date.
 
“Everything related to financial results announcement and the timing of this event (Deloitte’s resignation) is purely coincidental and has no direct correlation. The board meeting has been postponed and the new date will be announced shortly,” the company said in a statement on Monday.
 
“This is just a minor hiccup and doesn't represent any long-term business impact. Manpasand has always focussed on maintaining a sustained business growth. We still have a long way to go to achieve our high ambitions and we are well on our way,” the statement further said.