Lilliput investors may approach company law board: Sources

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There's a fresh twist to the Lilliput log-jam. A dispute over a fresh audit puts a question mark on the kids-wear brand. Sources indicate that Lilliput investors may have to approach the company law board and may seek to enforce a fresh audit demand, reports CNBC-TV18's economic policy editor Siddharth Zarabi.

The private equity investors, the statutory auditors and the independent directors on the board of the company seem to have reacted to anonymous calls. There are no details from any of those parties on what the specific allegations are. None of that has been documented. There is a Delhi High Court injunction that's been brought about against private equity investors.

There are two completely different versions on this and all of it hinges on anonymous calls that have apparently been made from a PCO somewhere in Delhi. This is proving to be a battle between a smart promoter, who seems to believe that his attempts for an IPO have been frustrated through these anonymous calls which just preceded the IPO process after a DRHP was put out and private equity investors seemingly acting in haste and deciding to pull out and resigned from the board, the statutory auditor who has been auditing this company for over five years.

SR Batliboi, a sister network firm of Ernst & Young also deciding to resign and the other side saying there are serious financial irregularities allegedly with regard to Lilliput and that the financials of this company allegedly do not stand scrutiny. There is also a situation where the private equity investors are not very forthcoming post the High Court order and the statutory auditor not at least publically stating what is really wrong with this company, putting a question mark both on the future of this company and what really has happened as far as these allegations are concerned.