Fairfax refutes charges that Digit was falsely shown to be profitable in 2021
Fairfax, which owns multiple companies in India, has refuted charges that its Indian portfolio company Digit Insurance was falsely shown to be profitable in its annual report in 2021 at an investor conference call on Friday. The call was held to respond to the allegations of short seller Muddy Waters, who has accused the company of asset value manipulation.
Fairfax’s Indian-Canadian founder Prem Watsa and the company’s management team answered queries refuting all the allegations of Muddy Waters.
Fairfax has invested $7 billion in India.
“Fairfax's reporting framework is IFRS, not US GAAP. We have been following IFRS since 2010," Fairfax's chief financial officer Jennifer Allen clarified.
«Digit was profitable under IFRS in 2021», she said.
The company's accounts in India are prepared under Indian accounting rules and showed a loss in 2021. Short seller Muddy Waters had claimed the company had lied about Digit's profitability.
Digit Insurance became the first unicorn in India in 2021 after Sequoia Capital announced an investment in the company that valued it at $3.5 billion.
“Mr. Block, we don’t tolerate misleading insinuations”, Watsa told Muddy Waters chief Carson Block who had also joined the conference call.
Muddy Waters has claimed that the fair value assigned to certain investments in Fairfax’s books are higher than their market value which makes the company’s financials look better than they are.
Toronto-listed Fairfax’s shares have recouped all the losses that they took in the immediate aftermath of
