Drop forensic audit and permit statutory audit: Parsvnath Developers to Sebi

Realty firm Parsvnath Developers has written to markets regulator Sebi to withdraw its interim order of forensic audit of the firm, saying there is no "wrongdoing" on its part.

Instead of forensic audit, the company requested that statutory audit should be conducted and an opportunity should be given for personal hearing.

On August 8, Sebi ordered a forensic audit of Parsvnath Developers, which figured in the list of 331 "suspected shell companies", on prima facie suspicion of misrepresentation of business by the firm with regard to certain transactions.

The company was asked to submit its reply on the interim order within 30 days.

In a filing to the BSE, the realty firm informed that it has filed its representation with the Securities and Exchange Board of India (Sebi).

"... while there is no hesitation to undergo any scrutiny, and particularly when we have consistently maintained that there is no wrongdoing on our part, such an order, which is based on prima facie observations and prima facie material only, is in fact detrimental to the interests of Company and its stakeholders including shareholders and small investors," the company said in its representation.

In its prayer, the realty firm said that the direction for appointment of forensic auditor "may be dropped". Rather, it should be permitted to cause an audit by the statutory auditor.

It also requested the regulator that no further orders be passed until the final investigation is concluded.

In its order, Sebi had said that the present enquiry was restricted only to contracts or sub-contracts undertaken by the company during the period 2009-10, 2010-11 and 2011-12.

Replying to this point, Parsvnath said the total income from the contracts or sub contracts stood at around Rs 11.15 crore for 2009-10, Rs 2.07 crore for 2010-11 and Rs 6.78 crore for 2011-12 fiscal.

"The entire Interim Order is based on doubts regarding genuineness of these transactions.

"However, while considering the same, it should also have to be kept in mind that the contracting and sub-contracting of these transactions by the company only accounted for 4.14 per cent, 1.16 per cent and 1.80 per cent of the EBIDTA of the company for the financial years 2009-10, 2010-11 and 2011-12 respectively," the realty firm said.