Sebi is probing the company on charges whether it is deliberately depressing its book value
Sebi also received several complaints from minority investors citing delay in delisting and manipulation of books of accounts
Mumbai: The Securities and Exchange Board of India (Sebi) which is probing Prabhat Dairy Ltd for alleged manipulation on Tuesday directed it to deposit ₹1,292 crore in an escrow for failing to cooperate with the forensic auditors.
Sebi is probing the company on charges whether it is deliberately depressing its book value and short-changing minority investors during the voluntary delisting process. Sebi started the probe and subsequent forensic audit basis a preliminary examination by the two bourses.
In their preliminary report both BSE and NSE in 2019 said that the cases warranted a detailed scrutiny and that they would not approve a voluntary delisting. They also recommended a forensic audit.
Sebi also received several complaints from minority investors citing delay in delisting and manipulation of books of accounts.
The matter pertains to Prabhat Dairy entering into a definitive sale agreement on 21 January 2019 with Tirumala Milk Products to sell the entire dairy business and sale of its subsidiary Sunfresh Agro by way of a slump sale on a going concern basis for a total consideration of ₹1700 Crore.
An amount of ₹1316.79 Crore was received during the FY 2019-20 post certain adjustments.
Sebi commissioned the forensic audit to Grant Thornton Bharat LLP in July this year to ascertain financials of the firm for years ending March 31, 2019, and March 31, 2020.
The auditor was appointed to ascertain manipulation of books of accounts of the firm, misrepresentation of financials or business operations by the company, wrongful diversion of funds by promoters, directors or key managerial persons and business transfer and share purchase agreements.
Sebi in the order noted that the promoters and managing director repeatedly failed in cooperating with the forensic auditor. Of 27 documents sought the promoters provided only three, Sebi noted.
However, basis preliminary assessment the forensic auditor said that it was not able to directly ascertain the sale proceeds of ₹1,316.79 crore.
"Unless the forensic audit is conducted, Sebi will not be in a position to determine whether or not the company has indulged in mis-statement of accounts, diversion of funds to its subsidiaries/associates, etc. which money belongs to its shareholders," Sebi said.
Taking a grim view of the conduct of promoters and directors Sebi moved to secure the transaction amount.
“The conduct of the Company and its Promoters/Directors does not inspire confidence in investors and exhibits blatant unwillingness to be transparent about the financial dealings. The stark opaqueness on the side of the Company and its Promoters/Directors as regards the availability of the Transaction proceeds for distribution to the shareholders of the Company (as had been publicly announced earlier) has aroused suspicion and anxiety in the minds of investors and other stakeholders," said Sebi in the order.
Sebi directed the company to transfer ₹1292.46 Crore. Payment of ₹1316.79 Crore received from the Transaction during the FY 2019-20 post adjusting for payment of ₹24.33 Crore paid to Advisors to the transaction.
Sebi also prevented the promoters and directors from disposing or alienating such amounts till the conclusion of the forensic audit/investigation.
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