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Institutional EYE

Commentary on Corporate Governance Issues

Quick Take: Infibeam Avenues Limited and their auditors

What has happened

  • Infibeam Avenues Limited’s (Infibeam) board met on 5 May 2019 (Sunday) and decided to remove SRBC & Co LLP, part of the E&Y network, as their joint statutory auditors.

  • They accused SRBC & Co. LLP of sharing unpublished price sensitive information on the personal emails of the team and third parties on multiple occasion.

  • Shah and Taparia, the joint auditors with SRBC & Co LLP, will continue as the statutory auditor.

  • SRBC & Co LLP has vehemently denied any wrong-doing and has stated that it is open to a third-party investigation to examine the issue.

  • The removal of auditors will require a shareholder vote.

  • An extraordinary meeting will be held on 30 May 2019 for the removal of auditors.

  • SRBC & Co. LLP will get an opportunity to present their case.

Infibeam: A timeline


14-Aug-2018 :

During the quarter ended 30 June 2018, based on third party information, SRBC & Co LLP had asked the company to perform an independent investigation in relation to certain matters such as merger and acquisition and other financial statements related matters that impacted the company’s financial statements for FY17 and FY18. This was disclosed in the Limited Review Report of the auditors for the quarter.


28-Sep-2018 :

  • Infibeam’s stock price crashes by about 70% in one trading day, following rumours about financial irregularities and concerns over a “co-founder’s” classification.

  • The company provided clarifications on the financial irregularities and confirmed that there was no change in the promoter group since the IPO.



  • Infibeam ratifies the appointment of SRBC & Co LLP (Firm Reg No: 324982E/E300003) as joint statutory auditors. SRBC & Co LLP were first appointed by Infibeam in their 2016 AGM.

  • Infibeam appoints Shah and Taparia (Firm Reg No: 109463W) as joint statutory auditors in its 2018 AGM for a period of five years.



The concern that was raised in the first quarter Limited Review, continued in the Limited Review Report presented jointly by SRBC & CO LLP and Shah & Taparia for the second quarter ended 30 September 2018. Infibeam received a report from an independent firm of chartered accountants who were appointed to perform the investigation, which, according to the company, did not contain any material adverse observations. However, the auditors requested for the detailed investigation report. Pending the receipt of the detailed report, the auditors commented that barring the issue raised on account of the mergers and acquisitions, the financial statements were prepared in line with the principles laid down in the applicable Indian Accounting Standards.


14-Feb-2019 :

In the Limited Review Report for the quarter ended 31 December 2018, both SRBC & Co LLP and Shah Taparia jointly raised concerns over advances to subsidiaries aggregating Rs. 1.2 bn and revenue accounting aggregating Rs. 320.1mn.


In FY19, Infibeam stopped publishing consolidated quarterly performance – which was a practice it followed in FY17 and in FY18.


Questions that need answers

  • What was the period during which the company claims the breach by SRBC & Co LLP was discovered?

  • What was the severity of the breach – was the information so shared on personal emails used to undertake insider trading?

  • Did the Audit Committee, upon discovering these alleged breaches, inform SEBI?

Issues to consider

  • Will SRBC & Co LLP remain effective as statutory auditors if the auditors are reinstated by shareholders i.e. the removal is not approved?

To read the full report, click here.

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