Business

Prabhat Dairy To Deposit Rs 1,292 Crore In Escrow Account: Sebi

Prabhat Dairy To Deposit Rs 1,292 Crore In Escrow Account: Sebi

Capital market regulator SEBI or Securities and Exchange Board of India on Tuesday ordered the Maharashtra-based milk and dairy products company Prabhat Dairy to deposit Rs 1,292.46 crore to an escrow account in a nationalized bank within seven working days. The regulator was probing whether Prabhat Dairy deliberately depressed its book value during its delisting process. Ordering the company's audit committee to directly monitor the process of setting up the escrow account, SEBI asked the panel to produce a compliance report by October 30.

In Tuesday's order, SEBI said Prabhat Dairy's promoters and managing director repeatedly failed to cooperate with the forensic auditor. It also said that the promoters provided only three documents against the 27 it had sought.

However, on the basis of a preliminary assessment, the forensic auditor said it was not able to directly ascertain the sale proceeds of Rs 1,316.79 crore.

"Unless the forensic audit is conducted, Sebi will not be in a position to determine whether or not the company has indulged in mis-statement of accounts, diversion of funds to its subsidiaries/associates, etc. which money belongs to its shareholders," Sebi said.

SEBI had earlier asked stock exchanges BSE and NSE to conduct a preliminary examination. In 2019, the bourses refused to approve a voluntary delisting, and recommended a forensic audit saying that the case warranted detailed scrutiny.

The regulator had also received complaints from minority investors of the company alleging delays in delisting and manipulation of books of accounts.

Prabhat Dairy entered into a definitive sale agreement with Tirumala Milk Products, a unit of Lactalis of France, in January 2019. The deal involved the sale of its dairy business and its subsidiary, Sunfresh Agro, for Rs 1,700 crore.

An amount of Rs 1,316.79 crore was received in financial year 2019-20 after certain adjustments.

In July this year, SEBI appointed Grant Thornton Bharat to conduct a forensic audit to ascertain the company's financials for financial years 2018-19 and 2019-20.