Sebi pulls up Prabhat Dairy for non-cooperation with auditor; asks it to deposit Rs 1,292 cr


MUMBAI: The Securities and Exchange Board of India (Sebi) has asked Prabhat Dairy to deposit Rs 1,292 crore into an interest bearing escrow account until a dispute is resolved about paying shareholders the proceeds from the sale of an operating unit.

Last year in January, Prabhat Diary had sold its subsidiary, Sunfresh Agro, to Tirumala Milk Products, a wholly owned unit of French dairy multinational Groupe Lactalis, for Rs 1,227 crore.

The company had told stock exchanges that it intends to share a substantial portion of the proceeds from the sale with shareholders after meeting tax liabilities and related transaction costs.

However, in September the company told the stock exchanges that the promoters intend to delist the company.

Soon thereafter, there was a media report that said investors were being short-changed in Prabhat Dairy’s delisting, which was at a sharp discount to the January share price, and that the move was also allegedly against the intent specified by the company earlier to return the proceeds to shareholders.

The regulator had appointed Grant Thornton to carry out a forensic audit after it couldn’t reportedly trace the proceeds of the sale transaction. Sebi has alleged the company and its promoters were not cooperating with the forensic auditor appointed by it and has not furnished the required information and documents, stoking concerns that the sale proceeds may have been diverted.

“The conduct of the company and its promoters/directors does not inspire confidence in investors and exhibits blatant unwillingness to be transparent about the financial dealings,” Sebi whole time member G Mahalingam said in his order on Tuesday. “The stark opaqueness on the side of the company and its promoters/directors as regards the availability of the transaction proceeds for distribution to the shareholders of the company (as had been publicly announced earlier) has aroused suspicion and anxiety in the minds of investors and other stakeholders.”

The regulator said the funds in the escrow account should not be used by the company for any other lines of business, including for deployment toward its residual revenue streams, such as the animal nutrition and the cattle feed businesses.





Source link

Leave a Comment

© 2020 Daily Dose of Market and Beyond News