Bain Capital and TPG, the largest outside shareholders of Lilliput, on Thursday filed an application with the Delhi High Court asking to unseal the interim report filed by the court-appointed independent auditors M/s S S Kothari, Mehta & Co (SSK). Bain and TPG also asked the court to appoint a local commisioner to take possession of the books of account and records of the respondent company.
Since the first allegations of accounting irregularities at the company last year, Bain Capital and TPG’s entities have focused on getting the company to pursue an independent audit. The two had filed a petition against Lilliput Kidswear and its promoter, Sanjeev Narula. In response to which, the court appointed S S Kothari, a reputed Delhi-based audit firm, vide an order dated November 4, 2011, for conducting an independent audit of the books of account of the company. SSK were appointed as a consensus choice between the parties.
Lilliput chief executive Sanjay Narula, however, did not respond to a query on the high court petition by the two investors. Bain Capital and TPG were also not available for comment.
S S Kothari Mehta & Co, has expressed inability to complete the court-directed audit. The auditor has cited the company’s non-cooperation in the audit as the reason. The auditor's report had been allowed to be inspected by the investors, promoter and the company.
The high court had directed an independent review of the company's books after a bitter fight between shareholders last September.
The private equity investors had accused Narula of fudging books and not providing access to the company's financials to the auditor. While Narula had alleged the investors were trying to stall the company’s Rs 850-crore initial public offering and seize majority control. The two marquee investors had together invested $86 million for 45 per cent stake in April 2010. Narula owns the remaining 55 per cent.
Last November, the court had mandated S S Kothari Mehta & Co to probe the company's books and review an earlier audit carried out by S R Batliboi.
S R Batliboi resigned as external auditor after Lilliput’s board disapproved of the company’s financial statements by a majority vote at a meeting on September 28, amid questions over the authenticity of the company’s books.
