Mumbai: Lodha & Co, auditor of Mcleod Russel India Ltd, has expressed doubts on the “going concern” status of the company as the tea-maker’s short-term liabilities are higher than their assets and as it is persistently incurring heavy losses. Mcleod Russel India, which is a Williamson Magor Group entity, has loaned borrowed funds to other group companies, and is facing financial stress as the group companies are not repaying their dues, the auditor said.
“These conditions indicate the existence of a material uncertainty about the Company’s ability to continue as a going concern,” the auditor said in its report accompanying the company’s Apr-Jun earnings statement. The company’s consolidated net loss has widened to Rs 116.4 million in June quarter from Rs 38.8 million in the previous-year quarter.
The losses would have been higher if the company had provided for the Rs 29-billion inter-corporate deposits given to the group companies. The recovery of funds issued through these deposits is doubtful, the auditor said. Of the total, the company has also issued deposits worth Rs 11 bn, which are in violation of the Companies Act, 2013, the auditor added. Mcleod Russel is resolving the issue with the Registrar of Companies, the tea-maker said. This is the second time an auditor has issued adverse findings in the financial statement of the company. Last month, Deloitte Haskins & Sells Llp had resigned as the statutory auditor of the company over the same issue.
