Bain, TPG appeal Del HC to unseal interim audit of Lilliput

Private equity companies Bain Capital and TPG are continuing in their struggle to uncover alleged financial irregularities at investee company Lilliput. The two PE players have filed another petition in the Delhi High Court asking that the interim audit of Lilliput be unsealed, reports CNBC-TV18's Menaka Doshi.

In a petition filed Bain and TPG have asked to appoint a local commissioner to take possession of the company's books of accounts and related records for safekeeping. A brief history to this case is that Bain and TPG had invested USD 60 million and USD 30 million in Lilliput, kids wear company in 2010. Thereafter Lilliput had expressed its intention to do an IPO.
However, allegations of financial irregularities prompted the private equity investors to seek an independent audit of Lilliput. In November last year, the Delhi HC ordered appointment of Delhi based auditor SS Kothari. But Bain and TPG allege Kothari was apparently unable to conclude the audit due to non-cooperation by Sanjeev Narula, the promoter of Lilliput.
SS Kothari subsequently filed an interim audit, which on Narula's request was sealed by the court. This petition filed today by Bain and TPG seeks for that interim audit report to be unsealed and also requests that a local commissioner be given the possession of Lilliput's books of accounts & related records. This is because the private equity players fear that Narula and Lilliput may destroy important papers.
In all of this Sanjeev Narula had offered to find an third party to purchase the private equity stakes, a proposal that Bain and TPG support but seems to have made little progress yet.
Sanjeev Narula says, "The court has already appointed three arbitrators. Let the interim report be discussed in arbitration. I deny having made any threats against any Bain officials. 8000 people are jobless because of this messy dispute. L capital is very keen to acquire the company and we have a termsheet. Diligence is on and the deal is expected to conclude June-end". Also watch the accompanyign video.