Home / Companies / News /  Reid & Taylor: NCLT refuses Kasliwals access to forensic audit copy

MUMBAI : The National Company Law Tribunal (NCLT) Monday refused the Kasliwals, the ex-promoters of Reid & Taylor, to access a copy of the forensic audit report carried out by KPMG which has found that the promoters had carried fraudulent transactions worth 3,524 crore.

The KPMG audit had found that the promoters Nitin Kasliwal and family had siphoned off 3,524 crore from the company between October 2014 and April 2018, following which the RP had filed an application with the NCLT to restate the book of accounts and also sought to launch criminal proceedings against the promoters.

At the hearing on Monday, the counsel for Kasliwal sought a copy of the KPMG forensic audit.

Resolution professional Venkatesan Sankaranarayan of EY had on January 1, 2019 filed an application with the NCLT after the KPMG audit found that Kasliwal had carried out fraudulent transactions worth 1810.11 crore by undervaluing many inter- and intra-company purchases and additional write- off of 1,713.88 crore without any evidence.

The application has been moved under Section 66 (1) of the bankruptcy law.

Refusing to allow Kasliwal access to the forensic audit, NCLT bench consisting of Bhaskara Pantula Mohan and V Nallasenapathy said the ex-promoters knew very well about what had happened and, therefore, it is not necessary for them access the report or allow them to inspect the books of accounts again.

The bench will hear the matter afresh on February 19.

"A transaction review by KPMG, submitted on December 17, 2018, based on the financial statements from October 1, 2014 to April 6, 2018, has found reduction of asset base to the tune of 1,810.11 crore by showing fictitious sale and purchase in its books, to establish inflated sale and purchase activity without any movement of actual goods," the RP had said in his application.

KPMG has found the board knowingly and frequently entered into such fraudulent transactions with potentially non-operating entities and has also written off 1,713.88 crore for which it does not have any documentary evidences.

It also reviewed select transactions from April 1, 2013 to September 30, 2014 and observed a reduction of asset base due to increased purchases worth to the tune of 2,076.66 crore. Of this 1,810.11 crore were recorded at its Bhiwandi division, the RP had said.

The report has also found that according to the documents filed with the corporate affairs ministry, no fixed assets were recorded in the books of accounts of all the entities and other current assets and debtors constituted 99% of the assets for all entities.

The company management has informed KPMG that as per the annual returns for the financial year to March 2016, the reduction in the carrying value of stocks was due to sale of goods at steep discounts or due to goods returned after end- of-season-sales.

The review noted that the entries in the books of account have revealed that total advance has not been paid by the company directly but were made by its vendors and related parties on behalf of the company. 

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