Manappuram in freefall as ED freezes Rs 143 cr-assets; sinks 21% in 3 days

Shares of non-banking financial company (NBFC) Manappuram Finance extended this week’s losses, slumping 14 per cent on Friday to an intra-day low of Rs 102.60 on the BSE as the Enforcement Directorate (ED) froze Rs 143 crore worth of assets of the firm’s MD and CEO V P Nandakumar in an ongoing money laundering investigation.

With today’s fall, the stock has lost 21 per cent since Wednesday, May 3 when the ED had first began searches at the company’s premises.

The case pertains to allegations of money laundering through "illegal" collection of deposits from the public, as per the ED.

During the course of searches, the agency said, it was found that the proceeds of crime have been "diverted and invested" by CMD Nandakumar into immovable properties in his name, in the name of his spouse and children and into the shares of Manappuram Finance.

Of the proceeds of crime, detected to be Rs 143 crore, deposits of Rs 53 crore were shown to have been returned in cash by the company, but ED investigation revealed that there was no proof of repayment or no KYC of the depositors, the agency said.

In a filing today, calling the ED order 'patently high-handed, arbitrary and unreasonable', V P Nandakumar said the shares that have been frozen were worth around Rs 2000 crore, but the value attributed to them is around Rs 140 crore.

The company on Thursday said that the ongoing investigation is in connection to deposits accepted by Manappuram Agro Farms (MAGRO), an erstwhile sole proprietor of V P Nandakumar, prior to 2012, which were subsequently repaid except only for deposits of Rs 9.25 lakhs.

That said, the company is mulling to raise funds via borrowings including through various debt securities in the onshore /offshore securities market.

"The board of directors may consider and approve issuances of debt securities during the month of May, 2023, subject to such terms and conditions including the issue price of debt securities, as the board / respective committee may deem fit," it said in a filing on April 29.

Moreover, the board will meet on May 12 to consider the firm's March quarter (Q4FY23) results and the declaration of an interim dividend.

The stock had hit a 52 week low of Rs 81.50 on June 20, 2022 and its latest 52-week high of Rs 133.90 was notched recently on April 19.