The Securities and Exchange Board of India (SEBI) has ordered a forensic investigation into Prabhat Dairy's Rs 1,700 crore deal with France's Lactalis.
SEBI's investigation comes after complaints by shareholders alleging that Prabhat Dairy misrepresented its financials, according to media reports.
The market regulator has appointed Grant Thornton for the audit. The probe will focus on expenditure worth Rs 438 crore by Prabhat Dairy, according to a BusinessLine report.
Prabhat Dairy sold its fresh milk business to Lactalis in April 2019. In December 2019, it applied for delisting from stock exchanges.
The company claimed major expenses as a part of its transaction with Lactalis, which - shareholders allege - was done to lower the delisting offer price, the report said.
Prabhat Dairy, which has 16,000 retail investors, has not filed its results since December 2019.
The BusinessLine report said a recent statutory filing by Prabhat Dairy mentions "estimated transaction costs and taxes" on sale of shares and business sale, even though the Lactalis deal was done over a year ago.
Prabhat Dairy has mentioned Rs 204 crore as indemnity, for claims arising in future, and Rs 234 crore as 'management estimate' of taxes, the report said.
Forensic auditors are looking into both these amounts, the report added.
The company did not comment on the investigation when contacted by BusinessLine.
"The company does not comment on speculations. Requisite disclosures related to the audit have been made by the company to exchanges. Company has sought a shareholder vote regarding the delisting offer made by promoters and already secured 99 percent voting in favour of the resolution, which includes all institutional investors. Once we receive delisting approvals shareholders will have an opportunity to exit as a price discovered through reverse book building," Prabhat Dairy told the paper.
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