Home / Companies / News / Srei founder Hemant Kanoria urges RBI governor not to accept KPMG report
Srei founder Hemant Kanoria urges RBI governor not to accept KPMG report
Sources say he has pointed out that any action based on "improper" report may hamper ongoing resolution process being undertaken by RBI's administrator under IBC
Srei founder, Hemant Kanoria, has written to Reserve Bank of India governor, Shaktikanta Das, asking him to advise banks and lenders not to act against the two Srei companies based on “inconclusive” findings in the KPMG forensic report.
According to sources, Kanoria has pointed out to the RBI that any action on the basis of the “improper” report may hamper the ongoing resolution process being undertaken by the administrator appointed by the RBI under Insolvency and Bankruptcy Code (IBC).
The letter dated March 17, incidentally comes even as the matter is pending before the Kolkata Bench of the National Company Law Tribunal (NCLT). Kanoria had moved an application challenging the KPMG report in January.
Sources indicated that in the letter Kanoria has said that any step taken on the basis of the KPMG report is likely to affect the revival process of the two companies (Srei Infrastructure Finance and Srei Equipment Finance) under the IBC process.
It is understood that Kanoria has listed a chain of events – starting from RBI inspection in January 2021 to appointment of KPMG as forensic auditor in April 2021, and appointment of administrator in October 2021 and finally the administrator appointing BDO to undertake a forensic audit of Srei companies – and contested the KPMG report on mainly on grounds of parallel audit and lack of proper process being followed to complete the report.
Sources indicated that the Srei founder had raised concerns that KPMG, while completing its report, had not given any opportunity to the erstwhile board and senior management to put forth their contentions and explain issues mentioned with proper perspective and background.
Srei founder Hemant Kanoria
Kanoria is understood to have contested that since the RBI-appointed administrator had appointed BDO as its forensic auditor, the role of KPMG should get extinguished.
Sources also said that the letter to the RBI mentioned, “In these circumstances, the inconclusive and improper KPMG report, if acted on, will be against basic principles of natural justice and fairness.”
Incidentally, during the course of hearing in NCLT, Kanoria counsel had said that KPMG had submitted three reports and even the final one had gaps. The issue of parallel auditing was also cited during the hearing and in the application moved by Kanoria in the tribunal on January 19. The order is awaited.
Kanoria's application before the NCLT had said that the “nature, scope and functions” of the audit conducted by BDO India and KPMG were overlapping, due to which there was likelihood of “concurrent, contradictory and divergent” conclusions emerging between the two auditors.
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