Ministry of Corporate Affairs likely to order probe into MG Motor and Vivo accounts, say sources

The Ministry of Corporate Affairs (MCA) is likely to recommend initiating a detailed investigation into the books of accounts of auto major MG Motor India and smartphone maker Vivo, sources told CNBC-TV18 on November 9.

This comes after MCA had earlier issued orders of inquiry and a Registrar of Companies’ (RoC) probe report has now been submitted. This probe by RoC began a year ago in 2022.

The probe was initiated in October 2022, the company had said "we are law abiding." A more updated response to the November 2023 development is awaited.

The company had in October 2022 said it received a notice seeking clarifications primarily on why it has operational losses basis its annual report for the first year of operations 2019-2020.

According to the aforementioned sources, the RoC has submitted its report in the matter and alleged discrepancies in financial and fund movement. Following the analysis of the RoC report, MCA is likely to issue an order for investigation, sources said.

The development comes at a time when JSW Group and Shanghai-based SAIC Motor Corp are said to be in final talks to pick up a significant stake in MG Motor India.

Separately, the ministry is also likely to order an investigation into the accounts of Vivo. This is nearly a month after the Enforcement Directorate arrested four industry executives including one Chinese national working for the smartphone maker India in a case of alleged money laundering, according to legal papers and lawyers working on the case.

The arrest added to the legal troubles of the Chinese phone maker in India and came amid rising tensions between Beijing and New Delhi over issues ranging from border disputes to India's increasing scrutiny of Chinese businesses and investment.

CNBC-TV18 has requested MG Motor India and Vivo India for comments on the latest development and is awaiting responses.

According to a Fortune India report, the ministry's probes are part of a larger investigation into the alleged money laundering and tax invasion by Chinese multinationals operating in the country. As per an estimate, the government is investigating around 400-500 Chinese companies operating in India, the report said in November 2022.