Mannapuram Finance Clarifies That ED Action Pertains To Promoter, Not The Company
Mannapuram Finance Ltd. clarified on Friday that the enforcement directorate action pertains to its promoter, Managing Director VP Nandakumar, and not against the company.
Nandakumar is exploring legal options after the Enforcement Directorate froze a part of his assets as part of an investigation under the Prevention of Money Laundering Act.
The assets frozen by the ED include 19.29 crore equity shares in Mannapuram Finance, worth about Rs 2,000 crore, according to a Friday exchange filing from the non-bank lender.
The ED visit has nothing to do with the affairs of [Mannapuram Finance] but pertains to a 10-year-old matter of my erstwhile proprietorship, Manappuram Agro Farms ("Magro"), which is no longer in existence. The freezing order itself clarifies that the ED's search operation was directed at Agrofarm. Steps taken by me in this regard have largely been accepted by the Reserve Bank of India vide its letter dated Jan. 1, 2015.VP Nandakumar, managing director at Mannapuram Finance
While the frozen equity has a higher market value, the ED has assigned it a value of around Rs 140 crore.
Magro used to accept deposits from people residing in Valapad, Kerela, and its neighbouring areas, according to Nandakumar's statement as part of the exchange filing. Magro also paid interest on these deposits and used the funds so raised in its primary business of agriculture.
The total quantum of deposits outstanding as of Feb. 1, 2012, was Rs 143.85 crore. But, following a communication from the Reserve Bank of India in 2012, Magro stopped accepting, renewing, and soliciting deposits.
Consequently, Magro moved to pay back all the deposits, and about Rs 34.5 crore was paid back by March 2012. "Monthly reports of the progress of repayment of deposits were collected by RBI, and their latest inspection report mentions that as of Sep. 30, 2022, only Rs 9.29 lakh was outstanding to be repaid, which was kept in an escrow [account]," Nandkumar said in the statement.
As of Dec. 31, 2022, Magro had repaid deposits worth Rs 143.76 crore, and the total outstanding amount remaining in the escrow account was Rs 9.24 lakh, the statement said.
"This order is patently high-handed, arbitrary, and unreasonable for many reasons," Nandakumar said in his statement, referring to the freezing of assets by the ED.
A petition has been filed on my behalf before the honourable High Court of Kerala seeking that the relevant FIR be quashed. In this regard, the court has passed an interim order directing that no coercive proceedings be taken against the accused.VP Nandakumar, managing director at Mannapuram Finance
The actions were taken after various incriminating documents were found and seized in raids conducted at six premises in Thrissur, Kerala, belonging to the company and its managing director, according to a notification by the ED.
Shares of Mannapuram Finance dropped 13.12% to Rs 103.60 apiece as of 12 p.m. on Friday, compared with a 0.86% decline in the benchmark Nifty 50.
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