Ricoh says fraud at Indian unit pegged at Rs683 crore
New Delhi: Ricoh Co. Ltd, the Japanese maker of printers and cameras, said on Friday that it had identified “one-off/exceptional items” amounting to Rs683 crore in a case of fraud that surfaced at the company’s Indian unit earlier this year.
The company, which declared financial results for the year ended 31 March 2016, posted a loss of Rs1,118 crore. Excluding the exceptional items, the loss for the year would have been Rs435 crore.
“The company has been investigating the falsification of its accounts. Following extensive investigation, the accounts filed today disclose the full extent of the losses suffered by the company and the underlying business performance,” Ricoh said in a statement.
“Based on the investigations, the company has identified the main causes of the falsification of accounts (disclosed as one-off/exceptional items). These include fictitious sales that inflate revenues; potential bad debts that relate to fictitious sales; unsupported adjustments that have inflated profits; inappropriate revenue and profit recognition; inventory provisions; and adjustments to balance sheet items for which inadequate accounting or controls or falsification resulted in irrecoverable balances,” the company said.
The problems at Ricoh India came to light when the company failed to submit its financial results for the June and September quarters to the stock exchanges.
BSE Ltd said Ricoh India would be shifted to the so-called Z group with effect from 28 March, because of non-compliance with listing norms for two consecutive quarters. BSE stopped trading in Ricoh India shares on 26 May.
Manoj Kumar, the then managing director and chief executive, along with Anil Saini, the then senior vice-president and chief operating officer, and Arvind Singhal, the then chief financial officer, were directed to go on paid leave from 30 March 2015, following which Kumar resigned from the company’s board.
On Friday, the company did not specify the status of these executives and if any of them had been found guilty.
Ricoh Co. holds a more than 70% stake in the company.
In July, the Japanese parent proposed to infuse Rs1,123 crore into the fraud-hit Indian unit to cover losses. The recapitalization process will not place any liability on minority shareholders of Ricoh India, it had said then.
Following approval from the National Company Law Tribunal, Ricoh India held an extraordinary general meeting on 14 October, and received shareholder approval for recapitalization.
“The infused cash was immediately used to repay debt and reduce the company’s interest burden,” the company said.
This balance sheet now represents the base for all future financial reporting, it said.
“The company does not expect any further cost or liabilities in respect of the falsification in the periods to 31 March, 2016 except in so far as any liabilities are imposed by way of investigation by any authorities. No provision has been made for such liabilities as the directors believe, based on their investigations, none are expected to arise,” it added.