Date:24/07/2004 URL: http://www.thehindubusinessline.com/2004/07/24/stories/2004072402170200.htm

Back What does the new auditor have to do with Lodha & Co?

Kohinoor Mandal

Kolkata , July 23

DOES Clark, Gardner, Wolf & Co, the newly appointed statutory auditors of Birla Ericsson Optical Ltd, a M.P. Birla Group company, have any links with the company's outgoing auditor, Lodha & Co?

The question has gained importance in the corporate world and chartered accountants over the last few days for reasons more than one.

In the last annual general meeting of Birla Ericsson, a joint venture company between the M.P. Birla Group and Ericsson Cables AB of Sweden, Clark, Gardner, Wolf & Co was appointed the company's statutory auditors because Lodha & Co expressed its "unwillingness to be re-appointed."

Though by name these two organisations appear to be as different as chalk and cheese, it is learnt that the two firms have the same address. This was confirmed by officials of the Institute of Chartered Accountants of India (ICAI) after checking the necessary registration documents.

According to ICAI officials, there are two partners of Clark, Gardner, Wolf & Co, namely, Mr Ragunath Dey and Mr P.L. Soni. When asked about its ownership, the ICAI official said he could not help because the institute does not record the ownership of CA firms.

During the course of its investigations, Business Line found that there was no separate office of Clark, Gardner, Wolf & Co. Instead, it shared office space and staff with Lodha & Co. No separate signboard of Clark, Gardner, Wolf & Co. was seen either.

The telephone operator-cum-receptionist at the office of Lodha & Co confirmed that it was also the office of Clark, Gardner, Wolf & Co and that Mr P.L. Soni was its sole representative.

The receptionist could not clarify whether Mr Soni had any relationship with Lodha & Co. However, when asked about Mr Soni's contact number, she said, "He is available on the phone numbers of Lodha & Co."

Clark, Gardner, Wolf & Co was appointed auditors of Birla Ericsson at its last AGM, which was held on July 20 at Rewa in Madhya Pradesh. The appointment appeared significant in the current scenario because Mr R.S. Lodha of Lodha & Co had claimed inheritance of the assets of the late Priyamvada Birla by virtue of the latter's will.

Before the AGM, Business Line got in touch with Mr D.R. Bansal, the Managing Director of Birla Ericsson, and asked about the reasons behind the change of auditors. He only said the question "should be answered by the audit firm or the board of directors."

After finding out that both the firms shared the same address, Business Line tried to get in touch with Mr Bansal but with no success. Even calls made to Mr Y.S. Lodha, President (Commercial) & Secretary of Birla Ericsson, and Mr Soni met the same fate.

The M.P. Birla group holds 38.94 per cent in Birla Ericsson through several group companies against 27.5 per cent of Ericsson. For the year ended March 31, 2004, the company's turnover dropped to Rs 21.46 crore from Rs 86.21 crore. Net loss increased to Rs 10.02 crore from Rs 3.31 crore.