No impact yet on Vivo handset supplies amid accounts freeze

The serious money laundering charges levelled against Vivo India by the enforcement directorate and the subsequent freezing of accounts has not yet impacted the Chinese mobile brand’s supply of mobile phone units to retailers and distributors with 15-20 days of stock released to the channel, people familiar with the matter said.

Vivo’s distributor in Tamil Nadu, Fangs Technology, has written to its business partners assuring that there will be no supply disruption, and its billings will continue and stocks will not have any issues.

“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.

Mobile phone retailers said they have not seen any impact of the searches at Vivo’s distributor subsidiaries.

“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.

Vivo India on Wednesday got some relief from the courts. The Delhi High Court has allowed the mobile brand to continue operating its bank accounts after maintaining a balance of Rs 250 crore in the bank accounts, and furnishing bank guarantees worth Rs 950 crore.

A Kolkata-based retailer said Vivo has also cleared pending dues from last month, earlier than usual in July, and have floated credit notes to retailers so that there is no disruption in stocks, indicating that the company is taking steps to ensure business operates as usual.

Vivo conducts its business via multiple independent state-level distributors of Chinese origin, which were raided by the ED on July 5 on allegations of money laundering. A retailer said the company also offers different margins, in different states, unlike other smartphone brands that maintain a one-country, one-margin policy.

Vivo had sent a representation to the ED on July 7, two days after the second-largest smartphone brand and its 23 associated distributor subsidiaries were raided, urging the agency to unfreeze its bank accounts so it can continue its business.

ED has alleged that Vivo India remitted Rs 62,476 crore, almost half of its turnover of Rs 1,25,185 crore, out of India, mainly to China in order to disclose huge losses in the Indian incorporated companies to avoid paying taxes in India.

As an action under the money laundering act, the ED has frozen 119 bank accounts of Vivo and its entities with a gross balance of Rs 465 crore. Urall News