Private equity investors Bain Capital and TPG, who have been
at loggerheads with Sanjay Narula, the owner of kids’ wear company, Lilliput, has filed an application in the Delhi High Court, where have asked for brief inspection of the court-appointed independent auditors’ interim report reveals financial irregularities, and demanded the court to make the report public. The petition also asked the court to restrain Lilliput’s founder Sanjeev Narula from threatening Bain Capital and TPG and their counsels, and appoint a local commissioner to take possession of the books of accounts and records of the company.
Highlighting the financial irregularities, the counsel of Bain Capital and TPG said in the petition that Lilliput’s bank statements showed transactions (Rs 186 crores withdrawals and Rs 195 crores deposit in 2010-11), which did not reflect in the company’s accounts. Alternatively, there were transactions in the company’s bank ledger (Rs 79.99 crores withdrawals and Rs 174.30 crores deposit), which was not found in the bank statements. It also said there was a gap of Rs 10.96 crores between the advance tax shown in the financial statements and those reflected in the income-tax department’s website.
While on the other hand, Narula accused the PE investors of deliberately attempting to obstruct their talks with other PE firms since they want Lilliput to die. Last year, both the PE funds had alleged that Narula fudged company accounts and filed a petition against Lilliput Kidswear and its promoter, following which the court appointed SS Kothari Mehta & CO (SSK) to conduct an independent audit into the books of accounts of Lilliput. Bain Capital and TPG said in the petition that despite court orders, there’s evidence that Narula continued to block information and refused to let SSK directly obtain bank statements of the company from its bankers.