Well-known investor, Shankar Sharma, has expressed concern about the lack of attention being given to EKI Energy Services. While the company had been under scrutiny by its former auditors, Sharma questioned why no one was currently investigating it. In a post on X (formerly Twitter), he shared screenshots of the company's financials and stock price without explicitly mentioning its name.
In his tweet he said, "It's ok that"Chaudah mulkon ki police" ek Hyd co key peechey padi hai ( kidding ) but ek Indore co ( playing "carbon credit -carbon credit" game) ke peechey ek-do desh ki regulatory police ko nahi padna chahiye kya?" - This loosely translates as "why is it okay that a Hyderabad-based company is under the scanner from multiple bodies but there has been no action on this Indore-based company? In his tweet, Sharma also alluded to both companies having marquee investors of the same initials.
The Hyderabad-based company Sharma was referring to is Brightcom Group where Sharma is invested. The Indore-based company he was referring to is EKI Energy, which is owned by marquee investor Mukul Agarwal.
On August 22, Sebi barred Brightcom CMD and CFO from board positions through an interim order issued on August 22 after investigations revealed several instances of accounting irregularities and mis-statements in the financials of the company. Sebi had also found that the company fabricated bank account statements pertaining to its preferential allotment of shares.
Following this, Sebi has barred Shankar Sharma and 22 other entities from selling Brightcom Group’s shares. In August 2023, Brightcom board accepted the resignation of Suresh Reddy, who was serving as the Chairman & Managing Director (CMD) of the company, along with the resignation of Narayana Raju, the Chief Financial Officer (CFO) of the company. The Hyderabad-based company globally provides comprehensive online and digital marketing services.
Also read: Brightcom Group announces leadership changes following SEBI's crackdown
On the other hand, in August 2023, EKI Energy, which provides climate change, carbon credit, and sustainability solutions faced criticism for the removal of auditors who raised questions about the company’s financial reporting.
According to the report submitted by the auditors, EKI Energy had incorrectly classified certain expenses as assets, which had the effect of overstating the company's profits. The auditor also expressed concerns about the company's ability to "continue as a going concern," noting that it had incurred losses in the past and had a negative net worth as of March 31, 2021." The company responded by saying that the management of the company asserted that "the revenue is recognized based on the principles of substance over form, transfer of an underlying asset, and satisfaction of performance obligation."
In a conversation with Moneycontrol, Manish Dabkara, CMD of EKI Energy revealed that the issue concerned the recognition of revenue for an engineering, procurement and construction (EPC) contract for the production of energy-efficient cookstoves. "The company had received money from the customer for the contract but according to the auditor revenue cannot be booked until the registration and verification process for the order was complete," he said. In order to avoid a similar future situation, he said that the company has started issuing different contracts for manufacturing and distribution and for registration and verification.
In a regulatory filing, the company said that the statutory auditor Walker Chandiok & Co was ousted on the grounds of unreasonable fee hike, inordinate delay in the conclusion of the audit for the fourth quarter and financial year ended March 31, 2023, resulting in adverse consequences including statutory fines, significant erosion of faith and trust on account of unresponsiveness, lack of involvement of the engagement team and on other various grounds.
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