 "Audit of Videocon hints at questionable accounting entries by promoters")
A review audit of debt-ridden Videocon Industries has indicated that there may be certain "questionable accounting entries and/or transactions" in the company before the initiation of insolvency proceedings when the company was managed by the promoter Dhoot family.
The Resolution professional of Videocon Industries has already filed an application with the NCLT to declare such transactions as "void and be set aside", said a note filed by the company to bourses while updating financial results for four quarters.
This has come after an independent transaction review audit was conducted by the resolution professional of the company as required under the Insolvency and Bankruptcy Code for identification of preferential, undervalued, extortionate and fraudulent transactions.
"The resultant observations from the Audit had indicated that there may be certain questionable accounting entries and/or transactions entered into before the commencement of CIRP", the note said.
In his plea, Videocon Industries RP has also requested the National Company Law Tribunal (NCLT) for "adjustments, if any, for such transaction(s) may be made upon".
"There are ongoing investigations against Videocon Group Entities by different government agencies, including SFIO and Directorate of Enforcement," the note said, adding "RP has been fully supportive and cooperative in the investigation being carried out by the statutory investigative agencies, including SFIO and ED".
Also Read
The resolution professional has filed results for four quarters ending June 2021, September 2021, December 2021 and March 2022 after collating data.
For the financial year that ended March 31, 2022, the company has reported a total standalone income from operation at Rs 755.72 crore and a net loss of Rs 6,111.4 crore.
Its revenue from Consumer Electronics & Home Appliances, mainly rental income from assets was at Rs 51.51 crore and Rs 741.34 crore from oil & natural gas.
The resolution professional has assumed control of Videocon Industries from September 27, 2019.
Besides, it also said it is unable to furnish the consolidated financial results as the "financial data/information in respect of the Subsidiaries/ Associates/Joint Ventures for the corresponding period are not made available to the Resolution Professional/ Company by the promoters and erstwhile management".
RP has filed an application with the National Company Law Tribunal (NCLT) seeking cooperation from promoters and erstwhile management of the company, for providing various data, including those that are required for preparing financial statements and data requested by various investigating agencies.
"The requested data is still not made available to the Resolution Professional. Thus, in the absence of required relevant data, the Financials Statements have been prepared on the basis of available data on best effort basis," auditor's note said.
Earlier, Anil Aggarwal-led Twin Star Technologies' with Rs 2,962 crore bid had emerged as the successful bidder for Videocon Industries and was also approved by the NCLT. However, this was challenged by three dissenting financial creditors before the appellate tribunal NCLAT.
The National Company Law Appellate Tribunal (NCLAT) had on January 05, 2022, set aside the NCLT order approving Twin Star Technologies' bid and remitted back the matter to the COC.
It also directed RP to continue to manage the 13 Videocon Group Entities.
Later, CoC decided to invite fresh bids on January 12, 2022, but Twin Star Technologies moved to the Supreme Court against the NCLAT order.
The apex court had on February 14, 2022, made an oral remark to the RP and COC to not proceed further with the CIRP of the Corporate Debtors till any further orders in subsequent hearings.
"Pursuant to these oral remarks of the Supreme Court, the status quo is being preserved in the current CIRP of Consolidated Corporate Debtors till further orders/directions of the Hon'ble Supreme Court. Therefore, the Resolution Professional continues to manage the Videocon Group Entities (including the Company), as per the provisions of the Code," it said.