Infibeam plays down auditors’ concern regarding payments to vendors
Infibeam Avenues Ltd, which operates payment gateway company CCAvenue, has addressed the concerns raised by its auditors regarding inconsistencies in payments to vendors in a stock exchange disclosure.
The auditors raised questions regarding Infibeam's advance payments made to vendors by its subsidiaries and the lack of requisite documents. The payments made to the vendors amount to Rs 122.31 crore.
Separately, the auditors also highlighted that Rs 32.01 crore in revenue was pending from the June 2018 and September 2018 quarters, which went towards web development and maintenance services, in the December 2018 quarter.
“Based on the information and explanations received from the management, we understand that the web development and maintenance services are customized/specialized in nature and comparable market price, robust documentation for arriving at the basis of price charged to customer is not available,” the auditors’ report stated.
The auditors, which were SRBC & Co. LLP, the audit arm of EY, and Shah & Taparia, made a submission in the stock exchange seeking the rationale behind the advance payments and pending dues.
“Based on the analytical procedures, inquiries from the management and other information from the management so far, there is requirement to provide additional information to make evidence more robust and convincing, with regards to justifying rationale, appropriateness of terms of entering the transaction including selection of vendors by subsidiary company, which management shall work on providing as it completes the process review.
Pending the receipt of the requisite audit evidence, we are unable to comment on the recoverability of advances and consequential impact, if any, on the results for the quarter ended December 31, 2018,” the report stated.
In response, Infibeam said in the disclosure, “With respect to auditors' comments, company has provided documentation and will make available additional documents to the satisfaction of the auditors.”
However, Infibeam's clarification did little to soothe investors' concerns. The company's shares fell as much as 5% on the Bombay Stock Exchange to a low of Rs 37.50 apiece on Monday, before paring the losses.
Last month, the Mumbai-listed firm agreed to sell its wholly-owned subsidiary Infinium (India) Ltd to business-to-business industrial goods aggregation platform Tradohub.
In December 2018, the company agreed to sell a wholly owned unit that operates its online marketplace to Mumbai-based fintech Suvidhaa Infoserve Pvt. Ltd.
In the same month last year, Infibeam invested in Mumbai-based digital payments tech firm Go Payments.