Ricoh India’s Full-Year Loss Estimated to Be 17.1 Billion Yen in Wake of Accounting Scandal
In the wake of an accounting scandal that has resulted in the dismissal of top officers at Ricoh India, parent-company Ricoh Company of Tokyo, Japan, reports that Ricoh India now estimates an un-audited loss of 11.2 billion Indian rupees (17.1 billion yen or approximately $160 thousand U.S.) for its fiscal year that ended on March 31, 2016
Ricoh Company states that it’s also filed a petition with the India National Company Law Tribunal in order to recapitalize the loss. Once the petition is approved, Ricoh Company, or its subsidiary company NRG Group Limited (or a combination of Ricoh Company, Ltd and NRG Group Limited), will have their existing shareholding cancelled and will effect a capital increase in Ricoh India by purchasing the same number of shares at a price agreed upon with the National Company Law Tribunal. “The recapitalisation does not place any liability on minority shareholders, nor changes the current shareholding of the two entities in Ricoh India,” the company stated.
Ricoh Company and NRG Group will contribute some 398 million India rupees to Ricoh India’s recapitalization.
Ricoh India’s troubles began last spring when it failed to file its financial results for two fiscal quarters with the Bombay Stock Exchange. Ricoh India said on March 29th that Manoj Kumar (former managing director and CEO), Arvind Singhal (chief financial officer), and Anil Saini (senior vice president and chief operating officer), were placed on mandatory leave with pay by Ricoh India’s board. Manoj Kumar subsequently resigned from the board and left the position of managing director. Shares of Ricoh India were suspended from trading on the Bombay Stock Exchange.
Ricoh India then appointed external auditors, PriceWaterhouseCoopers, to conduct an investigation. On May 12th, The Times of India reported that: “Ricoh India, a subsidiary of Japanese imaging and electronics company (Ricoh), has detected massive financial irregularities and fraud in the company, prompting it to lodge a police complaint after a forensic investigation revealed ‘wrongdoing.’”
Currently, according to the Economic Times of India, the Securities and Exchange Board of India (SEBI) “has expanded its probe into alleged misdoings” at Ricoh India “with fresh disclosures that its accounts appear to be ‘falsified.'” According to the Economic Times, sources says financial accounts going back “at least six years” are being investigated, with some quarters during the period showing sharp surges of up to doubling of recorded profits.
Ricoh Support for Ricoh India
Early this week, however, Ricoh Company also stressed its continued support for Ricoh India: “The proposed capital increase reflects that the Indian market has immense potential, and Ricoh Company, Ltd. is keen to support and ensure the business continuity of its subsidiary and grow its presence in the market. Ricoh India is now implementing measures to ensure there is no recurrence of such event in the future, and is reinforcing its management systems. Ricoh Company, Ltd. is, and will be, reinforcing its global governance to ensure that this remains an isolated instance.”
- June 2016: Ricoh India Suspends Top Officers in Wake of Financial Irregularities
- May 2016: Ricoh: Ricoh India’s Failure to File Financial Results ‘Unprecedented’; Alleged ‘Massive Financial Irregularities’