BSR & Co. LLP, chartered accountants, will continue to carry out the audit of group consolidated financials of UPL, India which includes UPL Corporation, Mauritius and its subsidiaries
Shares of UPL slumped as much as 9.40% on Friday after the company said KPMG resigned as the auditor of its Mauritius-based material arm UPL Corporation. The announcement was made after market hours yesterday.
At 01:40 pm, UPL was trading at ₹469.20 apiece, down 7.36% from its previous close, while the benchmark Sensex advanced 0.66% to 39,988.83.
"In order to re-organize the Audit Process to improve Productivity, at the request of the Company, KPMG Mauritius has resigned as Statutory Auditors of UPL Corporation Limited, Mauritius. M/s. BSR & Co. LLP, Chartered Accountants, continues to carry out the audit of Group Consolidated Financials of UPL Ltd, India which includes UPL Corporation Ltd, Mauritius and its subsidiaries," the company said in a stock exchange filing.
"There are no circumstances connected with our resignation which we consider should be brought to the notice of the members," KPMG said in its letter dated 8 October to UPL Ltd.
BSR & Co. LLP, a sub-licensee of KPMG in India, were appointed as statutory auditors of UPL in the annual general meeting held on 8 July 2017 for a period of five years to audit standalone and consolidated financial statements of the company.
Analysts at Angel Broking said, "UPL informed the exchanges that auditor M/s. KPMG, Mauritius has resigned as the auditor of UPL Corporation Limited, Mauritius. M/s. BSR & Co. LLP is a sub-licensee of KPMG in India. As per Company, in order to reorganize the Audit Process to improve Productivity, at the request of them, KPMG Mauritius has resigned as Statutory Auditors of UPL Corporation Limited, Mauritius. In the resignation letter, the auditor hasn't mentioned any adverse comment, they have said that no circumstances connected with their resignation which they consider should be brought to the notice of the members. We believe that this is sentimentally negative for the stock as the resignation of an auditor raises questions in the minds of the investors."
UPL reported a rise of 93.3% in consolidated net profit to ₹551 crore in Q1 June 2020 compared with ₹285 crore in Q1 June 2019. Net sales fell 0.9% to ₹7833 crore for the quarter ended 30 June 2020 against ₹7906 crore for the same quarter last year.
From the beginning of the year, shares of UPL have lost 17% against a loss of 3% in the benchmark index, Sensex. From March lows, the stock doubled, while Sensex gained 54%.