Educomp shares plunge amid speculation

MUMBAI: Educomp Solutions on Tuesday plunged nearly nine per cent amid reports that the firm might have fudged its accounts to boost share prices.

Shares of Educomp plunged 8.61 per cent to a low of Rs. 1,915.20 on the Bombay Stock Exchange. It was later trading at Rs. 1,942.15, down 7.80 per cent over the previous close. Over 7.46 lakh shares of Educomp had changed hands till afternoon trade on the BSE.

Media reports have surfaced about manipulation in Educomp’s accounts, which point at the rapid growth in its turnover and hefty profits made by the promoters in the company’s share trading.

On the National Stock Exchange, the scrip plunged 9.22 per cent to an intra-day low of Rs. 1,916.25. It was later quoting at Rs. 1,940, down 8.10 per cent over the last close.

Meanwhile, the company in its response to media reports said “there are no fictitious assets as all the assets are installed in the schools. It is wrong to say that intangible assets are mainly purchased from subsidiary companies. In fact, the total expense on account of intangible assets is Rs. 25.82 crore in 2007-08, whereas the purchase from subsidiaries companies (EducomP Learning Pvt. Ltd.) is Rs. 7.28 crore.”

The reports had cited Educomp booking fictitious assets to adjust bogus profits arising out of bogus sales and purchases. The company also rejected reports of promoters diluting their stake in the company to the extent of up to Rs. 250 crore at the high time of share market price.

“The promoters’ group has so far sold only about 5.07 per. The promoters still hold 55.03 per cent in the company,” Educomp said. — PTI

Centre to seek report

Sandeep Joshi writes from New Delhi

The Centre on Tuesday said it would look into the allegations regarding financial irregularities in the education-focused information technology firm Educomp Solutions, even as the company denied it as mere rumours and totally baseless.

“I am also aware of the reports floating around regarding certain alleged irregularities (in Educomp Solutions). We will seek report from the company and look into the matter,” Corporate Affairs Minister P. C. Gupta told journalists here.

Educomp Solutions termed the reports as “malicious” and aimed at “misleading the investors”.

Its Managing Director Shantanu Prakash said these rumours were being spread by people who do not understand their business model. Reports about directors quitting the company and promoters pledging stake were baseless, he added.

Source: The Hindu