Sesa Goa dismisses SFIO claims; stock down 2%

NEW DELHI: Stocks of Sesa Goa slipped lower on Thursday after reports of Serious Fraud Investigation Office ( SFIO) being directed by the corporate affairs ministry to initiate proceedings against the mining major.

“The Corporate Affairs Ministry is understood to have ordered prosecution against Sesa Goa Ltd on eight grounds, including over and under-invoicing of exports and imports of over Rs 1,000 crore,” according to a report.

On the prosecution, P K Mukherjee, Managing Director, Sasa Goa, in an interview with ET Now said, "We are yet to hear anything from Ministry of Corporate affairs about this since end June when we submitted our comments on SFIO Report to them."

“As and when we receive any further communication in this regard, we'll deal with it appropriately,” added Mukherjee.

“The SFIO has also alleged that Sesa Goa made excess payment of agency commission to sales agent amounting to Rs 40.6 crore to facilitate its exports of iron-ores to foreign buyers,” added the report.

“Commissions are paid in the business interest and enough documents are provided to show how these commissions are benchmarked with other companies and we dismiss any allegation in that respect,” said Mukherjee.

“We have also given enough documents to support the invoicing transaction as well and the same are given to SFIO,” added Mukherjee.

At 10:26 a.m., shares of the company were trading 1.3% lower at Rs 225.75. The stock has touched its day’s low of Rs 224.10, down 2.1%.

Analyst Call: Ashwani Gujral of ashwanigujral.com

The stock has been mired with lot of controversies and definitely such stocks have problems with bigger problem is Cair India deal on Sesa Goa. If the stock is able to get past Rs 240 levels, we could say some sort of bottom formation has happened.

The stocks then can inch higher towards levels of Rs 290-300. However, stock needs lot of consolidation and bad news to subside before it could move higher.