Founding member’s Departure Amidst Regulatory Concerns and Financial Matters in Indian Operations.
8th May 2024: In a dramatic turn of events, Elior India, a key player in the food service industry, is reeling under the impact of severe financial misconduct allegations. The recent departure of Vishal Suri, a founding member of Megabite(acquired by Elior in 2017), adds to the growing concerns of governance within the company. These events have unfolded subsequent to the withdrawal of an acquisition offer by Compass Group, a decision influenced by findings in an Adverse Audit report that unveiled significant financial discrepancies within Elior India.
Central to Elior India’s crisis are the supressing of the adverse audit and GST tax evasion offense, under the stewardship of the then CFO Rohit Sawhney who has since been promoted as the CEO. These irregularities unveiled in the backdrop of adverse audit findings highlight serious financial misgovernance concerns.
This financial upheaval unfolds concurrently with an ongoing arbitration involving the former CEO of Elior India, which revolves around a substantial sum of approximately 70 crores, indicative of broader governance challenges.
The governance controversies against Sawhney apart from the adverse audit and GST tax evasion also include harassment allegations filed against him by a senior female employee and investigated by an external agency. His promotion amidst these controversies is believed to have contributed to Suri’s departure.
Sources indicate that Mr. Suri was not offered a partnership interest in the company, while Ramakant, who is reportedly close to Sawhney and played a role in overseeing the harassment inquiry, has seemingly been granted a partnership interest. Following the inquiry overseen by Ramakant, two senior female members of the management committee resigned from the firm.
These concerns are compounded by the strategic decision of the Elior Group to increase investments in India under Sawhney’s leadership. This includes the awarding of construction contracts for building central kitchens and offices in Delhi and Hyderabad, without a formal bidding process for new facilities running into crores of rupees.
The emerging issues, encompassing adverse audit findings, GST evasion allegations, harassment complaints, arbitration claims, and substantial construction contracts, are now coming to light as senior employees depart from the organization. These controversial management decisions and misgovernance in Elior India, raises questions about the oversight and governance practices of the Board, particularly given the weak performance of the group’s share price which touched lifetime lows a few quarters ago.
