How the Only Listed Indian Beverage Company, Manpasand Beverages Meets its Doom
A series of unexpected events has impacted the company's growth and consequently, resulted in loss of profit and reputation it has made over the decades
The Indian beverage industry is largely diverse, comprising mainly foreign beverage companies and a handful of Indian players. The foreign beverage companies such as Coca Cola, PepsiCo, Nestle and Williamson Magor Group have covered a large proportion of the urban population, leaving the unfocused rural demographic aside. This untapped market was disrupted by an Indian beverage company named, Manpasand Beverages. The company was originally initiated in 1998 by Dhirender Singh.
Mango Sip, Fruitsup, OXY Sip and Manpasand ORS are primary brands that the beverage company offers to the consumers. Owing to the success of its product—Mango Sip, the firm gained prominence and gradually got listed in the Bombay Stock Exchange in 2015.
However, the beverage firm has recently being denounced for creating an INR 40 Crore GST fraud. According to Business Standard's report, Manpasand Beverage Ltd. has created more than 30 fake business units and allegedly showed transactions within these units. Owing to which, Paresh Thakkar CFO at Manpasand Beverages, Abhishek Singh̶ Director at Manpasand Beverages and Harshvardhan Singh have been arrested on May 24.
How did Manpasand Become a Popular Rural India Beverage?
Dhirendra Singh, currently working as CMD of Manpasand Beverages, initiated the company in 1998. The company followed a viable business strategy and accordingly targeted tier-II and tier-III cities, which were not on the radar for other beverage companies.
Mango Sip, which is one of the products of the company, became immensely popular among consumers in the early period, thus, growing revenue of the beverage company. Following the success of Mango Sip, the company launched Manpasand ORS in 2014 and OXY Sip in 2017.
The company steadily expanded its network and made its footprints in 20 states of the country by connecting with over 200,000 retailers. As the company was climbing the success ladder, it decided to increase its business and established its plants in Vadodara, Varanasi and Dehradun.
In Financial Year 2017, the company earned 75 per cent revenue from the sale of Mango Sip, out of which 55 per cent revenue came from rural areas and the remaining portion from IRCTC and semi-urban regions, as reported by daily news, Money Control.
Financial Backdrop of Manpasand Beverages Attracted Investors
In 2014, the beverage company received INR 80 Crore from SAIF Partners and Aditya Birla Group. The investment was made by both the companies concertedly prior to the IPO so as to retain their stake in the company. Following this, the company became the only Indian company in the beverage sector to get listed on BSE.
In June 2015, Manpasand initiated its first IPO offering, which gave the company a positive growth. Renowned investors namely Goldman Sachs (4.26 per cent), ICICI Pru Balanced Advantage Fund (1.31 per cent), SBI Emerging Businesses Fund (1.92 per cent) and Birla Sun Life Insurance Company (1.15 per cent) participated in the IPO, as per the aforementioned media report.
While the company was wearing the badge of success, it became negligent towards its financial stability and begun sinking in 2018.
What went Wrong with Homegrown Beverage Company
In 2018, Manpasand stocks' leaped down by 75 per cent in the market, as reported by the daily news, Bloomberg. This downtrend resulted due to various reasons. To begin with, the company hid its precise financial details from its auditor, Deloitte Haskins & Sells, resulting in the break off with the auditing firm as Manpasand's auditor.
The auditor had asked to present "significant information" to the firm, but it was not presented and consequently, the company could not announce its financial results on time.
The resignation of Deloitte Haskins & Sells hinted that something was wrong with Manpasand's financial report and thus investigations were carried on by market regulator and Ministry of Corporate Affairs.
On May 24, investigations brought concrete proof that the company was foraging its financial numbers. "The searches unearthed a huge racket of creating fake/dummy units for availing fraudulent credit and committing tax evasion of INR 40 crore and involving turnover of INR 300 crore," a Central GST and Customs press release said, as reported by the daily news, Bloomberg.
Following this, C-level executives of Manpasand Beverages got arrested. Since May 24, the company's stock has significantly decreased up to 60 per cent and further, its circuit limit decremented to INR 44.15, as reported by the aforementioned daily news.
Recently, the company's CMD Dhirendra Singh is also planning to resign from his position.
"Dhirendra Singh, CMD of Manpasand Beverages, is willing to take all necessary steps in the best interest of the company and the stakeholders, including stepping down from day to day operations of the company if required," the company said in its regulatory filings.
A series of unexpected events have impacted the company's growth and consequently, resulted in the loss of profit and reputation it has made over the decades.
This article was originally published by Jaspreet Kaur.