Shares of Manappuram Finance, a non-banking financial company (NBFC), extended this week’s losses by slumping 14% on Friday to an intra-day low of Rs 102.60 on the BSE. This happened after the Enforcement Directorate (ED) froze Rs 143 crore worth of assets belonging to the firm’s MD and CEO V P Nandakumar in an ongoing money laundering investigation. The stock has lost 21% since Wednesday, May 3 when the ED first began searches at the company’s premises.
The case relates to allegations of money laundering through the illegal collection of deposits from the public. During the course of searches, the agency found that Nandakumar had diverted and invested the proceeds of crime into immovable properties in his name, in the name of his spouse and children, and into shares of Manappuram Finance.
The ED said that of the proceeds of crime detected to be Rs 143 crore, deposits of Rs 53 crore were shown to have been returned in cash by the company. However, ED investigation revealed that there was no proof of repayment or KYC of the depositors. In a filing today, Nandakumar called the ED order “patently high-handed, arbitrary and unreasonable.” He said that the shares that have been frozen were worth around Rs 2000 crore, but the value attributed to them is around Rs 140 crore.
On Thursday, the company said that the ongoing investigation is in connection with deposits accepted by Manappuram Agro Farms (MAGRO), an erstwhile sole proprietorship of V P Nandakumar, prior to 2012. These deposits were subsequently repaid except for deposits of Rs 9.25 lakhs.
