Markets regulator Sebi Friday ordered a forensic audit of steel maker Adhunik Industries, which figured among 331 'suspected shell companies', on prima facie suspicion of misuse of the company's books of accounts.
Markets regulator Sebi Friday ordered a forensic audit of steel maker Adhunik Industries, which figured among 331 ‘suspected shell companies’, on prima facie suspicion of misuse of the company’s books of accounts. In an interim order, the regulator directed the exchange to appoint an independent forensic auditor to verify any misrepresentation, including of financials or business, by Adhunik Industries Ltd (AIL) as well as any misuse of the books of accounts or funds, including facilitation of accommodation entries or compromise of minority shareholder interest.
“The promoters and directors in AIL are permitted only to buy the securities of AIL. The shares held by the promoters and directors in AIL shall not be allowed to be transferred for sale, by depositories,” the Securities and Exchange Board of India (Sebi) said.
The regulator has advised the firm to file its reply or objections to the interim order within 30 days. “… there is a prima facie evidence that AIL was not in compliance with Sebi (LODR) Regulations, 2015 and there is prima facie suspicion of misrepresentation of business/ financials as well as suspicion of misuse of books of accounts of the company,” the regulator said.
The directors and key management personnel have prima facie failed to discharge their fiduciary responsibility, the regulator said. According to the order, approvals from requisite audit committee, board and shareholders were not obtained by the firm while executing fund transfers amounting to more than Rs 400 crore with Adhunik Corporation Ltd.
The regulator also noted that AIL had made advance payment of Rs 10.15 crore to Gagan Ferrotech Ltd in March 2016 with respect to purchase order issued to the latter in March 2015. The amount was subsequently refunded back to AIL during the period from April 2016 to June 2017 and no purchases were made by the firm.
“It is observed that AIL had failed to give adequate explanation for the same. Thus, there appears to be prima facie suspicion of misuse of books of accounts/ funds of AIL,” Sebi said.
AIL is among the firms against which Sebi initiated action on August 7, 2017, by ordering trading restrictions, following receipt of a list of 331 “suspected shell companies” from the government.
The ordered restrictions — allowing trade only once a month and that too for only buy transactions with a 200 per cent security deposit — were revoked in some cases, including that of AIL, a few days later following appeals filed by them with the Securities Appellate Tribunal, but Sebi was asked to continue with its probe and pass its orders expeditiously.