Infibeam fires auditor, claims leak of price-sensitive info

Mumbai: The simmering cold war between Infibeam Avenues, the first listed e-commerce company in India, and one of its main auditors, SRBC & Co LLP, an arm of the global major Ernst & Young (EY), is finally out in the open. On Sunday afternoon, after Infibeam issued a statement removing SRBC as its joint statutory auditor with an accusation of passing on unpublished price sensitive information (UPSI), the audit firm denied any wrong doing in the matter and said it was open to a third-party audit.

Infibeam said its board of directors had in its meeting on Sunday recommended — subject to regulatory approvals and shareholders’ nod — termination of the services of its joint statutory auditor SRBC “on the grounds of sharing company’s UPSI with personal email accounts of their team and third party on multiple occasions leading to breach of trust and loss of faith”. It said the same has been verified and confirmed by the auditor after an internal investigation.

On its part, SRBC said that it was strongly denying Infibeam’s allegations. “We have conducted a comprehensive investigation and stand by our findings. We are confident of our position and are open to a third party/regulatory inspection and will respond to the regulators, as required,” the statement said.

According to sources, since mid-2018, SRBC had been qualifying the accounts of Infibeam. It had also flagged a whistleblower’s letter around the same time and had asked the company to investigate the same. Then in the September quarter, Infibeam had brought in a joint auditor, Shah & Taparia, despite the account not being a large one. The qualifications by the statutory auditors made the company uncomfortable. “It was easy for EY to walk out, but it had decided to complete the work,” a person familiar with the development said.

Subsequent to auditor qualification and fears about its business model among investors, on September 28, the Infibeam stock crashed 70% in a day, falling from Rs 198 to Rs 59. On Friday, the stock closed at Rs 43. Infibeam is yet to announce its January-March quarterly and fiscal 2019 results.