KPMG to conduct forensic audit of Srei Equipment Finance

Mumbai: Srei Equipment Finance Ltd on Saturday said it has appointed KPMG Assurance and Consulting Services LLP as forensic auditor on advice of its bankers.

“The board noted the appointment of KPMG Assurance and Consulting Services LLP as forensic auditors as advised by the bankers as a step towards the proposed debt realignment plan. Further, DMKH & Co., chartered accountants have been appointed by the board as forensic auditors as a good governance measure,” it said.

In October, markets regulator Securities and Exchange Board of India (Sebi) mandated listed companies to disclose to stock exchanges if a forensic audit is initiated. That apart, such companies will later have to share findings of the report unless the audit was at the behest of a regulatory or enforcement body. While Srei Equipment Finance Ltd is not listed, its parent company Srei Infrastructure Finance is, and therefore made the disclosure.

Mint reported on 17 March that lenders to Kolkata-based Srei group had appointed audit firm KPMG to conduct a forensic audit. A forensic audit examines and evaluates a firm's or individual's financial records to derive evidence used in a court of law or legal proceeding, according to Investopedia, a website that demystifies financial jargon. Srei group’s promoters have proposed a debt restructuring, and lenders tend to insist on a forensic audit before approving debt recasts that are not accompanied by a change in management.

Meanwhile, Srei Equipment Finance said that the board had earlier received expressions of interest for capital infusion in of up to $250 million and had also approved raising of capital not exceeding ₹3,500 crore.

“In this regard, the company will be executing non-binding term sheets with US-based Arena Investors LP, Cerberus Global Investments B.V. and Singapore's Makara Capital Partners Pte Ltd for capital infusion in the company,” it said.

The company said it had anticipated the impact of covid-19 approached the National Company Law Tribunal (NCLT) with a scheme that proposed repayment of the loans in an “orderly manner over a period of time.

Last December, Srei was granted a repayment moratorium by the Kolkata bench of the National Company Law Tribunal (NCLT) from 1 January to 30 June. Under this scheme of arrangement, the company proposed to make repayments to various categories of debenture holders over various periods. For instance, retail investors will get their interest accrued during the moratorium period within 15 days of it ending. The order has been challenged by the Reserve Bank of India (RBI), bondholders and credit rating agencies in the National Company Law Appellate Tribunal (NCLAT).