Broker Network founder Rahul Yadav asks for two weeks to consider Info Edge's forensic audit request

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Broker Network founder Rahul Yadav has asked for two weeks to consider granting permission to Info Edge, the company's largest shareholder, for a forensic audit, according to sources close to the company. Info Edge, earlier this month, disclosed in a filing to the stock exchanges that it had initiated a forensic audit of Yadav's firm, appointing Deloitte as the auditor.

According to sources, Yadav has been unresponsive to Info Edge's repeated requests and legal notices for financial data about Broker Network, as well as details about other business transactions. Instead, Yadav has been asking Info Edge for more money in exchange for sharing the data requested by the investor.

It is worth noting that Broker Network has exhausted Rs 192 crore of investor money in the past 14 months.

Broker Network (4B Networks Private Limited), started in November 2020 by Housing.com founder Yadav, was created to enable real estate developers and brokers to communicate with each other and conduct their business through its platform. It also helped in loan origination for end consumers.

Yadav, who has control of the company's servers and systems, has so far refused to cooperate, the sources said. According to the shareholder agreement, Info Edge, which owns close to 60 percent of Broker Network, is entitled to full access to the data, the sources added. It is not clear whether Info Edge will take legal action to enforce the audit after the two weeks that Yadav has requested.

Info Edge declined to comment. Yadav did not respond to Moneycontrol's messages on WhatsApp.

According to the sources mentioned above, the forensic audit is expected to look into the several employee complaints against Yadav and cases against Broker Network. The audit will also look into allegations that the company has engaged in high-value transactions and deals with related parties.

Last week, Moneycontrol reported that Yadav haggled with Info Edge to raise funds for Broker Network at 99 percent discount to the last valuation. The offer was to bring in Rs 50 crore fresh capital infusion from a Dubai-based real estate agent.

Broker Network saw a net loss of Rs 58 crore in FY22 on revenues of Rs 18 crore, according to MCA filings of the company accessed by financial data platform Tofler.

For the quarter ending December 31, 2022, Info Edge informed its shareholders that it had written down its investment of Rs 276 crore in the company.