CMI Ltd's statutory auditor quits over unpaid fees and losses

A little less than a year ago, in January 2022, the company had shared that it was scouting for partners to enter the semiconductors business. (Representational image)

The statutory auditor of CMI Ltd, once a leading cable manufacturer in the country, has resigned, citing reasons such as non-payment of fees.

In an exchange filing dated December 12, the company informed the exchanges that Krishna Neeraj & Associates, a Chartered Accountant, resigned from the position of the Statutory Auditor effective December 11, 2023, following the submission of a resignation letter dated December 9, 2023.

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The resignation was attributed to the non-payment of audit/professional fees for the financial years FY22 and FY23, alongside "some unforeseen personal issues as well as other professional engagement."

CMI entered the Corporate Insolvency Resolution Process following an order from the National Company Law Tribunal (NCLT) on July 28, 2023.

According to the latest annual report filed on December 6, the company reported a net loss of Rs. 110.09 crore (after exceptional items of Rs. 90.25 crore) for FY23.

In the annual report, under the statutory auditor's remarks section, the auditor highlighted accumulating losses, stating, "The accumulated losses of the company as at the close of 31st March 2023 amounting to Rs.14305.62 lakhs as against which the paid-up capital of the company is Rs.1603.07 Lakh and the losses have eroded the net worth of the company."

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The auditor expressed concern about the company's concern nature, attributing it to consistent losses since the inception of COVID-19, market disruptions, minimal factory operations, and risks due to non-execution of orders post-Covid-19. The company acknowledged its inability to honor financial commitments to lenders.

In response to the auditor's comment, it was mentioned that a lender had filed an application against the company under the IBC, and the application had been admitted to the NCLT. Despite challenges, the company expressed optimism about the potential revival of its business segment in the future.

Less than a year ago, in January 2022, the company announced its search for partners to enter the semiconductor business.