Mangalore Chemicals & Fertilizers Ltd., (MCFL), a company in which Vijay Mallya's UB Group still holds about 22 percent, saw its shares plunge by almost 9 percent on the BSE on Monday in response to suspicion of "irregularities and mismanagement" by the company in transactions valued at Rs. 216 crore. This, even as capital markets regulator Securities and Exchange Board of India (SEBI) has widened its probe into the UB Group for possible siphoning off funds by the promoters and insider trading.
The MCF stock was trading at Rs. 42.10, down 7.37 percent at around 12.30 p.m. on the BSE.
On Friday, after trading hours, MCF said in a regulatory filing that auditing firm Ernst & Young LLP informed the company's board of likely "irregularities and mismanagement" in two separate transactions with Bangalore Beverages Limited and United Breweries (Holdings) Limited involving about Rs. 216 crore.
"Upon completion of its investigations, M/s Emsl & Young LLP has made a presentation to lbe Board af Directors at its meeting held on May 06, 2016 to the effect that the aforesaid transactions may have involved irregularities and elements of mismanagement in the Company," MCF informed the BSE.
"The company is taking necessary legal advice in connection with the findings of Ernst & Young LLP," it added.
MCF had invested Rs. 200 crore in Bangalore Beverages by subscribing to its preference shares and made advances to United Breweries Holdings Limited of which Rs. 16.68 crore was due as on March 31, 2016.
MCF was a UB Group company till last year when Saroj Poddar-led Zuari Group took a 53 percent stake in the company and also appointed Ernst & Young LLP to probe the transactions.
Meanwhile, the probe into the UB Group has widened with SEBI now widening its probe to look at likely siphoning off funds by the promoters and insider trading.
The matter is also being flagged to other agencies and government departments, including the Corporate Affairs Ministry and its agency Serious Fraud Investigation Office (SFIO) for white-collar crimes, the Press Trust of India quoted a senior government official as saying.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]