Recently, resignation of auditors is streaming in many of our timelines. You will know by now the names of entities such as Deloitte, Price Waterhouse & Co, Vakrangee, Atlanta, and Manpasand Beverages.

Remember PWC are the same people who did not resign from Global Trust Bank and Satyam. Yes the same PWC has resigned.

On April 27, 2018, Price Waterhouse & Co (PwC) resigned as auditor of Vakrangee Ltd.

On May 26, 2018, Deloitte Haskins & Sells resigned as auditor of Manpasand Beverages Ltd.

On May 31, 2018 PW quit as auditor to construction and infrastructure company, Atlanta.

In these cases the auditors resigned just days before signing off on annual accounts.


The outcome of a resignation by the statutory auditors is the obvious – dwindling share prices of the respective companies.  Mutual funds too have invested in these stocks and are now facing tough questions of their investors as net asset values (NAVs) of their funds have been impacted.  Fund managers are now asked whether they have done their due diligence while investing in these companies. This is difficult to digest, since they invest a huge sum (which is retail investors’ money) along with their own reputation based research, since they are accountable to investors, advisors and regulatory authorities.


The decision has definitely given a jolt to all concerned investors and there are generalizations galore about potential financial irregularities. First of all, let’s place things into perspective. In each of the three cases, the auditors chose to resign at the 11th hour of the announcement of annual financial results. The reason for each is also different and therefore cannot be viewed through a single lens.


In the case of Atlanta, PwC resigned after the Company apparently refused to share details of an ongoing income tax investigation and the resignation of an Independent Director. For Vakrangee, the auditors demanded information on election book, bullion and jewelry and found the information provided by the Company “inadequate.”


While for Manpasand, Deloitte has stated that it hasn’t received some ‘significant’ information from the Company. It doesn’t specify the nature of the information sought. So what does this mean?  Just as management of a company is answerable to investors, aren’t the Auditors answerable too? Due to confidentially agreements that Auditors practice, it is not possible for the investors to demand answers from them. In such cases, investors are left in a lurch without any clarity, and are usually at the mercy of the management, who, apart from justifying the unexpected action taken by their Auditors; have also to fulfill various regulatory compliances.

In a country where trusting company management is difficult the auditors are making it more difficult. A few years ago when an auditor resigned it was thought that the management was at fault. Now with Satyam, GTB, etc. we saw that the auditor was hand in glove. In all these resignations, I refuse to accept that the management is at fault and the auditor is clean. Ha, its too much of a stretch. However, I have no clue about what really happened. I refuse the blame the management. I also have not seen the share transactions data around the date of the resignation.

Also if it were a share in FnO, the damage to a the shareholders or traders would have been traumatic.


Some key questions that come to mind are:

  • Should auditors resign in this manner? Iam sure that they would have followed the legal process, but was the process equitable?
  • The actions of auditors have impacted the retail investors. Should they be answerable? We can argue that the resignation of the respective auditors is their rightful prerogative but what about the timing?
  • Should I assume that the last 7 years balance sheets are dipped in Dettol and are spotlessly clean?
  • Will the auditors cast a new PnL and Balance Sheet and ask the company to circulate among the shareholders?
  • Will the auditors also create a “reconciliation” between the management’s set of accounts and the auditors set of accounts?
  • Will the ICAI step in?
  • If the shareholders are paying their fees should auditors resign only at an AGM?
  • Why not create a procedure of shareholder approval for auditor’s resignation?

too many questions, but somebody has to raise them.

Vakrangee has been in news since the time allegations were made against the Company for price and volume rigging. After regulatory authorities started independent investigation; the stock price has plummeted eroding around 90% of the Company’s value in less than five months.

With regard to Manpasand Beverages, the corporate governance is being questioned. The only difference between Vakrangee and Manpasand is the visibility of operations. Manpasand has created a network to sell its product. Manpasand’s beverage brands are (allegedly) present in over 20 states through more than 200,000 retailers, over 2000 distributors and 200 plus super stockists. Since these are management figures, I would not trust them so easily, but assuming these figures were true in 2017, it was audited by the statutory auditors! In fact, according to the last report by Euromonitor; Manpasand has a market share of 8% in the beverages market. The exit of Deloitte has come as a surprise to investors of Manpasand, primarily because of the fact that Deloitte was the Auditor for them since the last eight years and they have never raised a ‘red flag’ earlier.

Atlanta had been in news earlier in 2015 also when they announced Master Restructuring Agreement (MRA) with lenders for restructuring of debt. The movement in stock price of Atlanta is attributed to improved financial position, though many investors are not sure whether the Company has actually improved or has done some kind of manipulation.

The only similarity among these three companies is the resignation of auditors before the announcement of results. However, as an investor, one would always demand an explanation from the Auditors as they too are accountable for their actions.








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  1. These incidents made auditors so powerful and they can bring the company to zero in no time. More than 90% erosion in share price turning promoters into beggars by overnight. We will see riches to rags story from many promoters and investors in coming days.

  2. Auditors resigning at the first suspicion of wrongdoing is better than auditors doing nothing and not aware of any wrongdoing in the case of PNB scam. Not one finger is being pointed at the auditors in such a megascam. Only bcoz it’s a govt bank that it’s shareprices hasn’t gone to dust.

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