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Price Waterhouse drops F-word in resignation letter to Vakrangee management

In a letter to the Vakrangee board, the chartered accountancy firm said it got no reasonable assurance whether the financial statements were free from material misstatements, whether due to “fraud or error.”

May 04, 2018 / 11:49 AM IST
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Price Waterhouse (PW), the former auditor of Vakrangee, cited “absence of adequate and relevant information and explanations” in the company’s books of accounts, as the reason for its resignation on April 27.

In a letter to the company's board, of which Moneycontrol has a copy, the chartered accountancy firm said it got no reasonable assurance whether the financial statements were free from material misstatements, whether due to “fraud or error.”

Vakrangee describes itself as a “technology-driven company”, focusing on last-mile retail points-of-sale, to enable people to “benefit from financial inclusion, social inclusion, Digital India, Skill Development, government programmes and a wider access to basic goods and services.”

In the letter, PW said the auditor had sought information from the company on several matters pertaining to its election books, bullion and jewellery business.

After repeated follow-ups, Vakrangee furnished some information, which the auditor said either did not “answer some of the queries raised by us or is inadequate or contradicting earlier explanations and thus do not provide us with appropriate audit evidence required as per professional standards to enable us to carry out the statutory audit engagement”.


PW met the company’s Audit Committee on April 18, and told the members of its intention to resign. However, the Audit Committee asked PW to consider some additional information which would be shared on April 27. But the additional information provided to PW was not satisfactory, the chartered accountancy firm said.

As a result, the auditor said it would not be able to obtain assurance “whether the financial statements as a whole are free from material misstatement, whether due to fraud or error”.

In a statement to exchanges, Vakrangee said the “the management would like to assure that the company 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.”

“The company is fully compliant with the Ind-AS accounting standards. The Audit Committee has also reviewed the financial statements and has been fully satisfied with all the information and explanations provided by the company,” the company said.

Shares of Vakrangee, which manages several government services such as Aadhaar enrolment, issuance of passports and railway tickets, have been under pressure amid recent speculation over price manipulation.

The company was investigated by the stock exchanges, and later got a clean chit from SEBI. (Read the interview of the company management here.)

The company was also the subject of an investigative piece by The Ken, which questioned, among other things, whether the company had as many service outlets as it claimed, and how it managed the revenues that it did. (Read Vakrangee’s clarification here.). Since its inception in 1990, the company has changed its name five times to reflect the “diversification of its business”.

The Vakrangee stock rose from as little as 50 paise in 2009 to a high of Rs 515 earlier this year. Since then, it has fallen over 80 percent, and trading in the stock has been frozen with only sellers at Rs 90, at the time of writing this article.

Shares of PC Jeweller, in which Vakrangee bought 20 lakh shares earlier this year, have also been in a freefall even as the PC management has denied any link with the latter.

(Correction: A previous version of this article had erroneously mentioned Vakrangee had bought 20 percent stake in PC Jeweller, instead of 20 lakh shares. This has been corrected.)
Tarun Sharma
first published: May 3, 2018 06:24 pm

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