In the FIR filed in Himachal Pradesh where JHS has its factory, the Indian vendor has named 19 P&G officials.
JHS, which had signed the agreement with P&G in 2010, claimed that termination of the P&G contract had caused huge losses to the company and it was on the verge of bankruptcy. The company had to build its manufacturing capacity (or change the machinery) according to P&G’s requirement and those could not be used to produce products for any other company, it noted.
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In its complaint filed on October 8, JHS, which is a listed company, stated that the termination of contract had caused a market cap loss of Rs 100 crore. The contracts were supposed to run through till at least 2016.
JHS managing director Nikhil Nanda confirmed the development.
However, in a third-party due-diligence audit undertaken by chartered accountants Jaikumar Tejwani & Co (for P&G), JHS revenue from toothpaste business, which is completely dependant on P&G orders, was found to be just Rs 8.39 crore in fiscal year 2012-13. Its detergent business, which is also completely dependent on P&G, contributed a revenue of Rs 17.88 crore in 2012-13.
In the audit report of JHS for the year ended March 31, 2013, its auditor Haribhakti & Co had noted JHS stating that its management “does not expect significant impact” on its operations because of the non-renewal of contract by a major customer (P&G).
“We had mentioned this as we were negotiating the renewal with P&G at that time and were hopeful of getting this done,” said Nanda, adding that P&G had made JHS invest a huge amount as an exclusive supplier, most of which was debt.
When contacted, a P&G spokes person said: “We firmly believe that the statements made by JHS are false & baseless. Since the matter is sub judice and under arbitration, we cannot comment further.”