Saturday, August 20, 2022

Vivo Smartphones Sales unaffected by the Latest Money Laundering Case

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Vivo India was charged with significant money laundering offences by the enforcement directorate, and as a result, accounts were frozen. However, 15-20 days’ worth of stock had already been released to the channel, according to sources with knowledge of the situation who spoke to ET.

Fangs Technology, Vivo’s distributor in Tamil Nadu, has written to its business partners to reassure them that there won’t be any disruptions to the supply chain, billings will go on as usual, and stocks won’t have any problems.

“We have given them (ED) full cooperation and disclosed all the documents to their fullest satisfaction. We would like to register here that our support to our distributors, retailers and our employees will not have any interference,” Fangs Technology wrote in a memo to its business partners. ET has reviewed a copy of the memo.

Retailers of mobile phones ET contacted claimed they had not noticed any effects from the searches at Vivo’s distributor companies.

“Channels and distributors usually maintain a stock of 15-20 days. But the brand is confident that the matter will get sorted out by then, so there will not be any disruption,” said a Mumbai-based distributor for Vivo smartphones who wished not to be named.

“We are getting stocks of Vivo mobiles regularly, after remitting the necessary amounts, and there has been no disruption. In fact, the distribution numbers have grown 8-10% since last month,” said another Mumbai-based distributor.

On Wednesday, Vivo India received some reprieve from the courts.

Vivo
Credit: Vivo

After keeping a balance of Rs 250 crore in the bank accounts and submitting bank guarantees totalling Rs 950 crore, the Delhi High Court granted the mobile brand permission to continue operating its bank accounts.

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According to a shop in Kolkata, Vivo has taken steps to ensure business as usual by clearing outstanding debts from last month earlier than usual in July and issuing credit notes to stores to prevent stock disruptions.

Vivo runs its operations through a number of independent, state-level distributors of Chinese descent, which the ED searched on July 5 on suspicion of money laundering. According to a merchant, the company offers various margins in various states, in contrast to other smartphone brands that uphold a one-country, one-margin strategy.

Two days after the raid on the second-largest smartphone brand and its 23 affiliated distributor businesses, Vivo filed a representation to the ED asking the department to unfreeze its bank accounts so the company could continue operating.

Vivo India is accused by the ED of sending nearly half of its total revenue of Rs 1,25,185 crore, or Rs 62,476 crore, outside of India, primarily to China, in order to conceal significant losses in Indian-incorporated businesses and evade paying taxes there.

The ED has frozen 119 bank accounts belonging to Vivo and its businesses with a gross balance of Rs 465 crore as part of a money laundering act action.

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Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.

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