MG Motor responds to notice sent by MCA over alleged financial irregularities
MG Motor India on Tuesday issued an official statement on the notice sent to it by the Ministry of Corporate Affairs over alleged financial irregularities. Underlining its commitment to a transparent business model, the company highlighted that it will fully cooperate with authorities ‘within the stipulated time frame.’
Bloomberg had initially reported on the probe initiated against MG Motor India after a ‘detailed analysis of the company’s financial statements indicated suspicious related-party transactions, alleged tax evasion, under and over-invoicing of bills and other irregularities.' The report, based on information from high-placed sources, also mentioned that the company’s top management has been summoned next month for clarification.
On its part, MG Motor - a British brand owned by China's SAIC Motor Corp Ltd. - clarified that it has a well-established and transparent process in place. The company, which made its India debut in 2019 and offers a number of hot-selling models - issued the following statement:
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"We have been sent a notice seeking clarifications primarily on why we have operational losses basis our annual report for the first year of operations 2019-2020. MG Motor India is a law-abiding, professionally managed company that adheres to the highest standards of compliance and governance and is committed to transparency. We fully cooperate with the Govt authorities on all issues and are in process of providing the desired records and information to the Registrar of Companies within the stipulated time frame. At the same time, we would also like to state that it is impossible for any automobile company to be profitable in the very first year of its operations. This is because of the huge Capex investment required and the long gestation period in a highly competitive market such as India where many multinationals have struggled for decades and have accumulated losses. We are a global multinational, and our books are maintained as per Indian accounting standards and audited by reputed audit firms."