Manappuram Finance sinks 10% as ED attaches firm's MD's assets worth Rs 143 crore

Buzzing stocks May 5, 2023. Representative image. Source: Unsplash

Shares of Manappuram Finance tanked 10 per cent and were locked in the lower circuit of Rs 107.35 apiece in the opening deals on Friday, May 5, 2023. The stock took a hit after the Enforcement Directorate (ED) on Thursday (May 4, 2023) said it recently conducted searches at six premises in Thrissur, Kerala, belonging to Manappuram Finance Limited and its Managing Director VP Nandakumar and froze Rs 143 crore lying in various accounts.

The searches were conducted as part of an investigation under the PMLA into the allegations of money laundering from the illegal collection of deposits from the public, said a PTI report. The ED searches resulted in the detection of evidence regarding money laundering and large-scale cash transactions in the form of public deposits, done by Nandakumar through his proprietary firm, Manappuram Agro Farms (MAGRO) without RBI approval. The deposits were illegally collected by him at various branch offices of MFL which is a Public Listed Company, through some of its employees.

"The outstanding illegally collected deposits which are the Proceeds of the Crime have been detected to be Rs 143 crore. When RBI detected the same and directed them to return the amount to the depositors, the accused responded to RBI that they have returned the money to the depositors but the ED investigation revealed that there is no proof of repayment or no KYC of the depositors," the ED said. The ED said that Rs 53 crore of deposits was shown to have been returned in cash but with no proof of repayment or KYC. During the course of searches, it was found that the proceeds of crime have been diverted and invested by Nandakumar into immovable properties in his name, the names of his spouse and children and in the shares of MFL.

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"Hence ED has frozen the assets of Nandakumar totalling Rs 143 crore. The assets frozen include eight bank accounts, investments in listed shares and shares of Manappuram Finance Limited. In addition, various incriminating documents evidencing money laundering and property documents of 60 immovable properties were also seized during the course of the search for further investigation," the official said. The role of the CFO of Manappuram Finance Limited and other employees, suspected to have assisted in the offence of money laundering, is being investigated.

Meanwhile, on May 4, during market hours, Manappuram Finance intimated exchanges about the Enforcement Directorate’s raid at the registered office of the company.

The filing read, "This is mainly with reference to the deposits accepted by Manappuram Agro Farms (MAGRO), an erstwhile sole proprietor of the concern of the promoter, prior to 2012, which were subsequently repaid except for the deposit of Rs 9.25 lakhs which could not be repaid by them despite MAGRO’s continuous efforts. In this regard, we would like to inform you that the Company is cooperating with the Enforcement Directorate’s investigation team by providing the required details sought from them. We will be able to provide more information on the completion of the search. There is not any material information other than that stated above in the possession of the company which might be the cause of the increase in the volume of the security of the company."

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