The venture capital investor backing Manpasand Beverages Ltd indicated that the fruit juice maker might have pushed Deloitte Haskins and Sells LLP "too hard" to sign off on the financial results and that this could have forced the auditor to resign.
Vishal Sood, managing director at SAIF Partners, told CNBC-TV18 that Manpasand's management "didn't want to delay reporting of earnings like last year". But Deloitte was "not keen" to sign off without the information it needed for auditing, he said.
Manpasand had plunged into turmoil after it revealed on Monday that Deloitte had resigned as its auditor over the weekend. Its shares slumped 20% each on Monday and Tuesday, and 10% Wednesday—the maximum permissible limit for each day.
On Thursday, the stock again fell by the maximum limit of 10% to Rs 223.50 on the BSE, recording its seventh consecutive loss.
Sood said the information Deloitte had sought was not "out of the ordinary". He, however, supported Manpasand's claim that the company had been providing all the information to Deloitte from time to time.
"As they don't have Enterprise Resource Planning, it took (a) longer time than normally required. As a result, the follow-up queries also got delayed and this back and forth happened several times," he said.
Sood also pointed out that Deloitte never took up this matter with the board. "We are surprised as there was no previous discord between management and auditors."
Sood, who said he was speaking in his personal capacity, claimed that SAIF Partners had done due diligence before investing in Manpasand in 2011 and 2014 but didn't come across any trouble. SAIF Partners, which holds a 17.6% stake in Manpasand, doesn't plan to sell any shares as of now, Sood said.
SAIF Partners didn't respond to email queries sent by VCCircle on two earlier occasions.
On Wednesday, Manpasand had refused the audit firm’s allegations.
Deloitte had said in its resignation letter on 26 May that it was resigning because Manpasand had not provided it with “significant information” which it had requested several times for the purposes of auditing the financial results and that it would not be able to audit the company’s books.
The auditing firm also pointed out that there had been no progress with respect to the “pending information, evidences and explanations” despite several reminders.
Manpasand, however, denied any such inaction on its part. “Deloitte has been an auditor of Manpasand for eight long years, and we have been providing all required information as and when required by them. While there could have been some delays but we have never denied sharing any information with them ever,” the company said.
To fill up the vacancy, the company has appointed Delhi-based Mehra Goel & Co. as the new auditor. The new auditor “shall hold office till conclusion of the annual general meeting, subject to approval of the members of the company,” the juice maker said.