Manpasand Beverages
Company & Promoter background
- Manpasand Beverages is a fruit drink manufacturing company engaged in processing, manufacturing and marketing of juice from fruit pulp. It offers its products under the brand names Mango Sip, Apple Sip, Guava Sip and Litchi Sip.
- The company was founded in 1997 and is based in Vadodara, Gujarat
- Mr Dhirendra Hansraj Singh is the Chairman and Managing Director and holds a Bachelor's Degree in Arts from Gorakhpur Vishwavidyalaya, Varanasi.
The Sharp Practice modus operandi
- The company is alleged to have overstated its revenues and profits.*
- The company set up 30 fake units across the country. Purchase and sale transactions were then shown with values inflating with each transaction in order to claim a cumulatively large sum of input credit.**
- These inter-unit transactions were worth over INR 3 billion and their input tax credit would come up to INR 0.4 billion.**
The red flags & the bust
- Incongruence in market share data, too-good-to-be-true growth and industry-leading margins were the red flags prior to the auditors resigning in May 2018.
- In FY19, the company wrote down its sales and receivables by issuing a credit note of INR 1.8 billion, and providing for a credit loss of INR 1.2 billion on its receivables.
- To divert funds, capital work in progress and capital advances seem to be inflated as well.
An amount of INR 2.7 billion has been provisioned for losses in FY19.
- The promoters were jailed for GST fraud in May 2019. The company has deposited INR 178 million with the GST authorities under protest to secure their release.
Sources:
* Business Today, 9-Oct-19 – “Is Manpasand Beverages among the biggest corporate frauds in India?”
Money Control, 31-May-19 – “How a Rs 40-crore GST fraud unfolded at Manpasand Beverages”