Forensic audit of V B Industries to continue: Sebi

Markets regulator Sebi said on Friday the forensic audit of V B Industries and restrictions imposed on its promoters and directors "needs to continue".

V B Industries figured among 331 'suspected shell companies' identified by the government last year.

Through an interim ruling in November 2017, the Securities and Exchange Board of India (Sebi) had directed the BSE to appoint an independent forensic auditor to verify any misrepresentation of financials and business by V B Industries and misuse of the books of accounts and funds.

Also, the promoters and directors of the firm were permitted only to buy its securities.

The interim ruling was passed after the regulator had observed that there was prima facie evidence of misrepresentation of business and financials as well as suspicion of misuse of funds and books of accounts of the company.

"I note that VBIL (V B Industries Ltd) has chosen not to appear for hearing and has also not submitted any response to the allegations/prima facie findings/ directions in the interim order," Sebi Whole Time Member Madhabi Puri Buch said in a fresh order.

"Further, no material has been brought to my notice contradicting the allegations/prima facie findings as described in the interim order or warranting any change in the directions passed in the interim order," she added.

The regulator noted that the entire extent of violations can be unearthed only by means of a forensic audit.

"Therefore, the forensic audit and restrictions on promoters/ directors, which has been directed vide interim order dated November 9, 2017 needs to continue," Sebi said.

Among others, the regulator had held in its interim ruling that the company had failed to submit sufficient documents to substantiate its loans and advances given and there was no bank statement entry with respect to transactions with two firms -- Rylan Trades Pvt Ltd and Rotokul Suppliers Pvt Ltd.

Buch said that the facts and circumstances of the case as brought out in the interim order have not changed, justifying the dis-continuation or modification or revocation of the directions passed in it.

"Thus, I... hereby confirm the directions contained in the interim order dated November 9, 2017 and forensic audit of VBIL as directed vide interim order shall continue," Buch said.