Sebi initiates forensic audit of 2 Future firms

The audit is with respect to consolidated financial statements and account books of FRL and some other entities for the financial years ended March 2020, March 2021 and March 2022, it said.

The markets regulator has also appointed Chokshi & Chokshi LLP, a chartered accountant firm, as the forensic auditor, two Future Group companies informed the stock exchanges in separate statements.
The markets regulator has also appointed Chokshi & Chokshi LLP, a chartered accountant firm, as the forensic auditor, two Future Group companies informed the stock exchanges in separate statements.

The Securities and Exchange Board of India (Sebi) has initiated a forensic audit into the financial statements of beleaguered Future Retail (FRL) and Future Supply Chain Solutions (FSC) over concerns of improper disclosure of financial information.

The markets regulator has also appointed Chokshi & Chokshi LLP, a chartered accountant firm, as the forensic auditor, two Future Group companies informed the stock exchanges in separate statements.

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“The Sebi has reasonable grounds to believe that the disclosure of financial information and the business transactions in the matter of FRL have been dealt with in a manner which may be detrimental to the interest of the investors or the securities markets…” Future Enterprises (FEL), one of the group companies, said in a regulatory update.

“…an intermediary or a person associated with the securities market may have violated the provisions of the Sebi Act,” the regulatory filing said, quoting a letter it received from Sebi. The letter, an email, was addressed to FRL’s resolution professional (RP), it added.

The audit is with respect to consolidated financial statements and account books of FRL and some other entities for the financial years ended March 2020, March 2021 and March 2022, it said.

Another group company FSC, in a separate statement, said an audit of the company would also be conducted. “Audit of FSC will be with respect to the related party transactions with FRL during the above review period. FSC shall extend its cooperation to the forensic auditors during the audit process,” it said. The review period for FSC would be financial years 2019-20 to 2021-22, it added.

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Earlier on July 27, Future Lifestyle Fashions said in an exchange filing lenders had appointed GD Apte & Co, chartered accountants, to conduct a forensic audit of the firm.

Earlier on July 20, the National Company Law Tribunal’s Mumbai bench had admitted an insolvency petition filed by Bank of India (BoI) against FRL and appointed Deloitte India-backed Vijay Kumar V Iyer as RP, paving the way for bankruptcy proceedings of the debt-laden retailer. The tribunal, which has been hearing the case, also dismissed an interlocutory application filed by US e-commerce giant Amazon seeking to dismiss the petition to initiate bankruptcy proceedings against FRL.

On April 28, 2022, BoI had filed a petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against FRL, the flagship firm of Kishore Biyani-led Future Group, for defaulting Rs 856.10 crore as of December 31, 2021. BoI has an exposure of Rs 1,441.62 crore to FRL, while the total exposure of banks was estimated to be at about Rs 17,000 crore.

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