InvestorQ : Can you tell me about the ROC investigation into MG Motor India?
Arti Chavan made post

Can you tell me about the ROC investigation into MG Motor India?

Rutuja Nigam answered.
4 weeks ago

The Registrar of Companies (ROC) has started an inquiry into the financial affairs and dealings of MG Motor India. Apparently, the top management and the auditors of MG Motor India have been summoned by the ROC after it discovered alleged irregularities in the accounts submitted ROC. The ROC has sought a detailed explanation. This inquiry is under the special provisions of the Companies Act 2013. This is done at the level which is above seeking just information but it is not as serious as an investigation. It refers to alleged financial irregularities that ROC has found, and needs some answers.

MG Motor India has agreed to fully cooperate with the ROC in its inquiry. One of the allegations pertain to operating losses shown by the company in its first year of operations asking for an explanation. However, MG Motors has pointed out that the car business is a long gestation business where a lot of administrative, marketing and research costs are front-loaded. MG Motor India has been one of the early birds in the electrical vehicles space in India. The upfront expenses in this business include front loading of capex, marketing expenditure, establishing dealer networks etc. These are long term business investments.