Sebi on Monday ordered a forensic audit of the books of SunEdison Infrastructure Ltd (SIL) to ascertain whether there have been any manipulations and said the clouds surrounding the acts and intentions of the company and its connected entities need to be urgently removed.
The watchdog has asked BSE to appoint a forensic auditor to examine the books of accounts of the company for the period from April 1, 2019 to December 31, 2020, as per a Sebi order.
In the wake of a complaint alleging sale of the company's assets to promoters or its related entities on a slump sale basis at erroneous and reduced valuation, Sebi had conducted an examination of the matter.
SIL had entered into a framework agreement on June 23, 2020 with South Lake LLC (South Lake), Fenice Investment Group LLC (Fenice), Pashupathy Shankar Gopalan, Anil Jain, SILRES Energy Solutions Pvt Ltd, Pashupathy Capital Pte Ltd, Sherisha Infrastructure Pvt Ltd (SIPL), Sherisha Technologies Pvt Ltd and Avyan Pashupathy Capital Advisors.
The agreement was to restructure and transfer certain businesses of the company to SESPL -- a joint venture between SIPL and a company proposed to be set up in the UK by Pashupathy Pte, South Lake and Fenice. SIPL is a company promoted by an SIL promoter.
Further, SILRES Energy would receive an investment of USD 2,500,000 from Fenice and USD 10,000,000 from South Lake. Also, certain identified businesses of SIL would be transferred to SESPL (SunEdison Energy Solutions Pvt Ltd) on a slump sale basis.
As per the Sebi order, the valuation of various segments and subsidiaries of the company do not appear to be fair and transparent.
The suspicion that the listed company has been used as a device/ artifice to obtain various projects and then siphon out/divert these projects to promoter related entities through slump sale cannot be brushed aside at this stage, it noted.
"I observe that there are sufficient material on record to make a prima-facie view that the valuation of the assets of the company and its subsidiaries have been not fairly stated, giving rise to genuine suspicion that the assets of the company are being transferred out to give undue benefits to the promoter entity (STPL) and related entity (SESPL) at the expense of the public shareholders of the company," Sebi's Whole Time Member S K Mohanty said.
BSE has been directed to submit the forensic audit report, including all annexures, along with its recommendation within 15 days from the date of receipt of the forensic audit report. The company has been given 14 days' time from Monday if it wants to file a reply.
The forensic auditor should submit its report to BSE within three months from the date of this order, Sebi said.
Further, SIL has been restrained from disposing of, selling or alienating its assets, including effecting the transactions agreed upon under the framework agreement.
Among other directions, SIL, its management and all the signatories to the framework agreement have been directed to maintain status-quo in respect of all transactions and not to undertake any act in furtherance of the agreement till further directions.
Keeping in view the facts and circumstances surrounding the events pertaining to valuations and the frivolous justification put forth by the company, "it becomes incumbent now that the clouds surrounding the acts and intentions of the company and its connected entities be urgently removed", it said.
This will be possible only through a process of a detailed investigation into its financial transactions, valuations and other related affairs and conduct pertaining to those financial transactions, the watchdog said.
"This will not only be in the interest of the company but also in the interest of its shareholders to ensure that the matters are investigated within a definite timeline before the proposed deals are pushed through to execution.
"Such an investigation will not only bring clarity to all the issues and aspects pertaining to the financial statements, assets, valuations of assets and other transactions but also will help the Company itself to complete its business restructuring in a transparent manner to the satisfaction of its shareholders," it noted.
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