Govt Asks MG Motor India To Explain Irregularities In Its Books: Report

The Ministry of Corporate Affairs (MCA) has asked MG Motor India to explain certain alleged irregularities in its books.

The MCA, through its registrar of companies (RoC), has summoned the company's directors and its auditor Deloitte to explain certain alleged audit deficiencies that had been discovered during the course of the probe, according to an Economic Times report.

"The inquiry against the firm is part of the larger nationwide probe commenced by the ministry into entities with Chinese nationals on their boards. However, in the instant case, certain audit irregularities have been found and they require explanation for which the directors have been summoned to join the probe," the report said, citing a source close to the development.

Meanwhile, MG Motor said it has received a notice seeking clarifications primarily on why it had reported operational losses for its first year of operations, 2019-2020.

"We fully cooperate with the government authorities on all issues and are in process of providing the desired records and information to the Registrar of Companies within the stipulated time frame," the company said.

In the past few months, India has tightened scrutiny on companies that have links with China. The government was recently probing the local units of ZTE Corp. and Vivo Mobile Communications Co. for alleged financial improprieties.

The government is also reportedly examining executives of Chinese companies registered in the country to check whether these are genuine businesses and not shell entities.