The stock of education solutions provider Educomp Solutions today dipped 12.28 per cent to close at Rs 1,490.05 on the Bombay Stock Exchange (BSE) following reports that the Ministry of Corporate Affairs (MCA) has initiated an inquiry into the company's records.
Educomp faced allegations that it had bloated its turnover figures. To counter this, the company had lodged a complaint with the Economic Offences Wing (EOW) to “identify the source of malicious emails alleging account manipulation”. Besides, it had also approached the Securities & Exchange Board of India (Sebi) to investigate the matter.
A senior MCA official, on condition of anonymity, said all companies are required to file annual returns, documents and balance sheet by November 30 with the Registrar of companies (RoC). The ministry has ordered inspection of the accounts of those companies that have failed to do so. On being asked about the timeline for such inspections, the ministry official said there is no fixed timeline but it could take about six months.
The inspection under Section 209A of the Companies Act, 1956, would help authorities to know what all the companies have been up to in terms of spending and allocation of funds and other financial matters.
Educomp CEO Shantanu Prakash explained, “This is a routine annual exercise and we are open to any scrutiny. However, we have not received any communication from them as yet, though the ministry has assured an investigation into this.” The company also announced the appointment of global consultancy firm Grant Thornton as internal auditors for the company to reinstate credibility in the firm. It is also in talks with the Big Five to be their external auditors. Anupam Bansal and Company are the current external auditors for the firm.
Prakash, meanwhile, said here today the company was planning to set up budget schools in small towns across India. These schools, called Vidya Prabhat Schools, which are expected to provide education to students in rural areas for Rs 700 per month per student.
These schools with CBSE affiliation would follow the NCERT curriculum and offer a combination of conventional and vocational education from lower KG to Standard 12. With a strength of 700 students per school, Educomp expects to get around 20 per cent return on investment in the next three years.
The company expects to set up five Vidya Prabhat Schools by July and 100 schools in the next three years with a total investment of Rs 70 crore. The first five schools would come up in north India, including Bazpur, Kashipur, Bahl Parav and Gadarpur in Uttrakhand, and would be open for admission in 2009.
