Bubber Jindal and Company, a Daryaganj-based chartered accountancy firm, resigned as the statutory auditor of Ajay Singh-owned SpiceHealth on August 1, citing “preoccupation with other assignments”, according to documents reviewed by Business Standard.
SpiceHealth, meanwhile, told Business Standard that it had already appointed a new auditor–Haryana-based Prashant Saini and Associate–on August 2. In its financial statement for FY21, SpiceHealth called itself “the fastest growing company in the country”.
SpiceHealth came into existence in September 2020 when SpiceJet airline’s promoter Ajay Singh converted his fruit and vegetable trading company Spice Fresh Private Limited into a pathological testing company Spice Healthcare Private Limited (SpiceHealth) amid the Covid-19 pandemic.
SpiceHealth, which made a net profit of Rs 22.42 crore in FY21, isn’t a subsidiary of Singh’s airline SpiceJet. While SpiceHealth did post a net profit for FY21, SpiceJet has been making losses for the last four years. On August 31, the airline said its Chief Financial Officer Sanjeev Taneja had resigned with immediate effect. On September 9, SpiceJet named Ashish Kumar as its new Chief Financial Officer.
According to its website, SpiceHealth runs multiple labs, collection centres and vaccination centres in six states/union territories: Delhi, Haryana, Bihar, Jharkhand, Tamil Nadu and Rajasthan. Its website saidthat SpiceHealth has tested over 5.4 million samples as on September 20, 2022. Avani Singh, daughter of Ajay Singh, is the company’s CEO.
In December 2019, Spice Fresh had appointed Bubber Jindal and Company as statutory auditor to assess its books from FY20 to FY24, according to the documents. The Daryaganj-based firm continued to audit the books even after Spice Fresh became SpiceHealth.
Spice Fresh was a loss-making company since its birth in May 2018. In FY19, it earned Rs 64.55 lakh revenue and posted a net loss of Rs 74.53 lakh. In FY20, the fruit and vegetable trader earned Rs 68.58 lakh revenue and its losses narrowed to Rs 97,529.
After Spice Fresh was converted to SpiceHealth in September 2020, its fortunes turned around. SpiceHealth earned Rs 79.19 crore revenue and made a net profit of Rs 22.42 crore in FY21, as per the documents.
As the company started earning significant profits, the fees of its auditor increased accordingly. Bubber Jindal and Company earned Rs 35,000 as fees to audit the books of Spice Fresh for FY20. However, the accountancy firm was paid Rs 5 lakh to audit the books of SpiceHealth in FY21, according to the documents.
SpiceHealth told Business Standard: “Until October 2020, SpiceHealth was doing business as Spice Fresh and was dealing in trading of food and vegetables. The revenue from earlier business was not significant. After the change of name and business activities, there was a significant increase in revenue during FY21 and accordingly the fees were also increased.”
On August 1 this year, Bubber Jindal and Company tendered its resignation as statutory auditor of SpiceHealth.
In its resignation letter, the firm stated: “This is to inform you that we, Bubber Jindal and Company, chartered accountants, are submitting our resignation as the statutory auditors of the company with immediate effect.”
“Due to our preoccupation with other assignments, we are not able to devote sufficient time required for the purposes of audit of SHPL (SpiceHealth) for FY22,” it added. Bubber Jindal and Company did not respond to queries sent by Business Standard.
According to the Companies Act, 2013, a private company must hold its annual general meeting for the previous financial year by September-end. The law says the private company must submit its financial statement (annual result) for the previous financial year to the Registrar of Companies (RoC) within 30 days of holding the AGM.
On September 28, SpiceHealth told Business Standard that its AGM will be conducted as per the provisions of the Companies Act, 2013, within the stipulated timeline. It said its “books of accounts are being audited by the new auditor”, which was appointed on August 2.
SpiceJet airline incurred net losses of Rs 316 crore, Rs 934 crore, Rs 998 crore and Rs 1,725 crore in FY19, FY20, FY21 and FY22, respectively. In Q1 of FY23, it incurred a net loss of Rs 789 crore. On August 23, Ajay Singh had said that the airline was exploring multiple options, including a stake sale to other airlines, to raise up to Rs 2,000 crore.