UPL plunges over 7% after statutory auditors resign from Mauritian arm

By Urvashi Valecha

Shares of UPL fell 7.6% on Friday, after KPMG Mauritius resigned as statutory auditors for UPL’s Mauritius arm UPL Corporation.

In a filing to the exchanges, UPL Corporation shared the letters that its auditors had written. In the notification, the company clarified that in order to reorganise the audit process and to improve the productivity, the company had asked KPMG Mauritius to resign as statutory auditors of UPL Corporation.

In its letter to UPL Corporation, KPMG Mauritius, said, “We hereby submit our resignation as auditors of UPL Corporation with immediate effect. There are no circumstances connected with our resignation which we consider should be brought to the notice of the members.”

Despite this, shares of UPL tanked to close at Rs 467.75 apiece.

However, BSR & Co, who were appointed as statutory auditors in 2017 for a five year period will continue to remain as the statutory auditors for the company, including for the consolidated financial statements of UPL India, said the company in its exchange filing.

Deepak Jasani, head — retail research, HDFC Securities, said, “The investors and analysts have concerns on why the auditors of Mauritius subsidiary resigned abruptly. The Mauritius arm of UPL happens to be their global investment holding company, it is responsible for the acquisitions that the company makes abroad and to raise debt funding for the same. Investors and analysts have raised concerns in the past about the high debt ratios at the group level and the slow speed at which it is falling.

“Management’s commentary on the resignation of the auditors and the way they are planning to deal with high debt, in the forthcoming September results concall, may assuage some concerns of the investors and analysts.”

The stock of UPL has risen by 83.37% since its March 23 lows whereas, the Nifty has risen by 54% during the same period. Conversely, the stock of UPL is down by 20.5% since the start of the year but the Nifty is only down by 3.4% for the same period.