The Ministry of Corporate Affairs (MCA) asked MG Motor India to explain certain alleged irregularities in its books, people familiar with the development told ET.

The MCA, through its Registrar of Companies (RoC), summoned the company’s directors and its auditor, Deloitte, to explain some of the alleged audit deficiencies that were uncovered during the investigation.

MG Motor said it had received a notice asking it to explain, in the first place, why it reported an operating loss for the first year of operations, 2019-2020.

“The investigation into the firm is part of a broader nationwide investigation launched by the ministry into entities with Chinese nationals on their boards. However, in this case, certain audit irregularities were found and they require clarification for which the directors were called to join the investigation,” said a source close to the development.

The directors of the company were summoned under section 207 of the Companies Act 2013. This section empowers the registrar or inspector to make an inspection or inquiry and to apply to the books of account for inspection.

MG Motor India, in a statement to ET, said it is a law-abiding, professionally managed company that adheres to the highest standards of compliance and governance and is committed to transparency. “We are fully cooperating with government authorities on all matters and continue to provide the necessary records and information to the Register of Companies in a timely manner,” the company said.

It went on to say that no car company could be profitable in its first year of operation given the large capital investment and long development period in a highly competitive market such as India where many multinational companies have struggled and accumulated losses for decades. “We are an international multinational company and our books are maintained as per Indian Accounting Standards and audited by reputed audit firms.”

An email sent by Deloitte remained unanswered by press time.

MG Motor is a British brand that was acquired by China’s largest car manufacturer SAIC Motor. SAIC entered the Indian market through Motor MG and launched its first car here in 2019.

Although MG Motor’s cars have been a hit with Indian consumers, the company’s bid to bring more capital to India from its parent company to expand operations has hit a snag.

At the height of the Covid-19 pandemic in 2020, the Indian government increased its scrutiny of direct investment from countries that share a border with India. MG Motor has been waiting for clearances for about two years and has started looking at alternative sources of capital, including from equity investors, ET had reported in July.

Previously, the three Chinese-owned mobile phone manufacturers were Oppo India, Xiaomi Technology India and Vivo Mobiles India – notices on the investigation of the alleged evasion of duties were handed over to the Minister of Finance Nirmala Sitharaman The upper house of the parliament informed about this in August.

https://economictimes.indiatimes.com/industry/auto/auto-news/corp-affairs-ministry-seeks-explanation-on-a/cs-from-mg-motor-india/articleshow/95215276.cms

Previous articleJaxport’s $23 million grant will help ‘get to zero emissions’
Next article“Vesti” commented on the arrival of Mercedes F1 for the test of young pilots in Abu Dhabi