With the government initiating an inquiry into the alleged financial irregularities by China-owned MG Motor India Pvt Ltd, the company has said its books are maintained as per Indian accounting standards and audited by reputed audit firms.

The response from MG Motor India came a day after reports said the ministry of corporate affairs (MCA) has initiated an inquiry against the local unit of China's state-owned carmaker SAIC Motor Corp Ltd after certain irregularities were found in its books.

Further, the MCA, via the registrar of companies (RoC), has summoned MG Motor India's directors and its auditor Deloitte, seeking clarification on the issues raised by the government department.

"We have been sent a notice seeking clarifications primarily on why we have operational losses basis our annual report for the first year of operations 2019-2020. MG Motor India is a law-abiding, professionally managed company that adheres to the highest standards of compliance and governance and is committed to transparency," MG Motor India said in a statement.

Saying that it fully cooperates with the government authorities, the company said it's in the process of providing the "desired records and information" to the RoC within the deadline.

The MCA is reportedly investigating the company on various aspects, including alleged tax invasion, irregularities in invoicing and shady related-party transactions.

On the MCA's query on MG Motor India reporting an operational loss in its first year of business in India, it said it's impossible for any auto company to be profitable in the very first year of its operations. "This is because of the huge Capex investment required and the long gestation period in a highly competitive market such as India where many multinationals have struggled for decades and have accumulated losses."

Meanwhile, the company said on Tuesday that it has reported 53% rise in retail sales at 4,367 units for October 2022 in India.

MG Motor account books

MCA notice: MG Motor says providing info to govt on its books