The government is likely to recommend an investigation into the financial records of Chinese car maker MG Motor India and Beijing-based smartphone maker Vivo, according to a media report on Thursday.
Earlier in November, the Ministry of Corporate Affairs (MCA) through its registrar of companies (RoC), summoned the company’s directors and its auditor Deloitte to provide clarification on specific audit irregularities discovered during the inquiry.
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India’s action further intensifies the scrutiny of Chinese companies operating in the country.
The government had issued a notice to MG Motor India inquiring about the reasons behind its losses in the fiscal year 2019-2020, the first year of operations in India.
An analysis of MG Motor India’s financial statements had revealed suspicious related-party transactions, alleged tax evasion, discrepancies in billing, and other irregularities.
Responding to the government’s move, the auto major emphasised its commitment to adhering to the highest standards of compliance and governance, asserting that it is a law-abiding company dedicated to transparency.
“It is impossible for any automobile company to be profitable in the very first year of its operations,” it said in its statement.
Last month, the Enforcement Directorate (ED) arrested four industry executives of Vivo in a case of alleged money laundering, the business television reported, citing legal documents and lawyers working on the case.
Earlier this year, the president and managing director of MG Motor India, said the company is aiming to become profitable in the fiscal year 2024.
