Sebi orders forensic audit of FRL’s financial statements of last 3 years
The Securities and Exchange Board of India (Sebi) has ordered a forensic audit of the financial statements of the beleaguered Future Retail.
“Sebi has reasonable grounds to believe that the disclosure of financial information and the business transactions in the matter of Future Retail, have been dealt with in a manner which may be detrimental to the interest of the investors or the securities markets and/or an intermediary or a person associated with the securities market may have violated the provisions of Sebi Act,” the capital market regulator said in a letter to the company.
Future Consumer and Future Enterprises on Thursday disclosed to the exchanges about the directive from the market regulator to Future Retail. They further said Chartered Accountants Chokshi & Chokshi have been appointed as forensic auditor. It will audit the consolidated financial statements of Future Retail and also the books of accounts of the company and some other entities for the financial years (FY) FY20, FY21 and FY22.
Last month, the Insolvency and Bankruptcy Code (IBC) proceedings were invoked against Future Retail. Sebi’s letter was sent to interim resolution professionals (IRP) who have been appointed under the IBC.
Future Group owes its 26 lenders over Rs 15,000 crore.
In 2020, the Group had decided to go for a jumble sale of its unlisted and listed companies to Reliance Retail for about Rs 25,000 crore to repay its ballooning debt. However, e-commerce giant Amazon, which had in 2019 acquired 49 per cent in Future Coupons, a company that owns 10 per cent in Future Retail, accused Future Group of breach of contract.
Recently, in a regulatory filing, Reliance Industries said the deal with Future Retail would not go through because the company’s secured creditors had voted against it.
Legal experts said Sebi typically orders forensic audits of listed companies if they suspect manipulation of books of accounts and its subsidiaries, misrepresentation of financials and business operations, and wrongful diversion or siphoning of company funds by promoters, directors and key managerial persons.