On September 28, the reports of ecommerce retailer Infibeam stock getting crashed by more than 70% in a single day circled the media all day round, leaving the industry amid a state of confusion. The stock collapsed as much as 73% before closing 71% lower at INR 58.45 on Friday (September 28) in Mumbai. A few hours later, a WhatsApp message was found to be the culprit.
Reportedly, a WhatsApp message circulating among traders raised concerns about the ecommerce company’s accounting practices.
“The note said that the company (Infibeam) gave an interest-free and unsecured loan to its subsidiary with negative net assets to be repaid over eight years. The company has reclassified its co-founder, who continues to hold a large chunk of shares as non-promoter. This triggered a sell-off in the shares, “ mentioned an ET report citing dealers in the know of the development.
As per reports, the company in voluntary clarification to BSE said it had always provided timely information and clarifications as sought by the Stock Exchanges. “There is no pending information or announcement from the company which may have a bearing on price behaviour.”
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Also, Infibeam denied making any changes in the list of promoters disclosed by the company to offer documents for its IPO in its media statement. It further accepted that the company has given interest-free unsecured loans to its wholly-owned subsidiary NSI Infinium Global since inception.
“These loans are short-term loans which are repayable on demand and have been utilised by NSI solely for its business and operations,” added the media report.
Although termed to be as rumours as no one has yet taken the responsibility of issuing the above mentioned WhatsApp note, the incident has created quite a stressed situation for Infibeam.
According to reports, nearly INR 9,200 Cr worth of investor wealth in Infibeam, has been eroded as the market capitalisation of the company plunged to INR 3,900 Cr from INR 13,105 Cr in lieu of this event. To be noted, Infibeam has already been handling a pile of losses in this financial year.
As Inc42 reported earlier, the company recorded a net loss of $1.97 Mn (INR 13.88 Cr) for Q1 FY2019 ended on June 30, 2018. This is more than 5x of $314K (INR 2.2 Cr) loss in Q4 FY2018.
At present, Infibeam is also in talks to expand business in IT segment. It is looking to set up its payments bank and also raise $292 Mn (INR 2000 Cr).
An email query sent to Infibeam by Inc42 did not elicit any response till the time of publication.