SEBI orders forensic audit of Parsvnath

Suspects misuse of books by realtor Delhi-based realtor Parsvnath Developers has come under the scanner of Securities and Exchange Board of India (SEBI), which has directed stock exchanges to appoint an independent forensic auditor to verify if the listed real estate entity has misrepresented its business and financials. “I note that there is prima facie suspicion on misuse of books of accounts and misrepresentation of financials/business of the company,” SEBI whole time member Madhabi Puri Buch said in an order on Wednesday. “I find that it would be appropriate that the financials of the company be independently audited to establish their genuineness of its transactions / contracts and sub-contracts... including the role of KMPs, directors and promoters,” it added. SEBI wants the auditor to verify whether there was any misuse of the books of accounts or funds including facilitation of accommodation entries or compromise of minority shareholder interest. Investigations reportedly showed that invoices were not backed by work completion certificates in certain transactions, while there were instances where there was insufficient data to identify the land for which contracts or sub-contracts were either taken or given. “This is further corroborated by the fact that PDL (Parsvnath Developers Limited did not produce any work completion certificate, workings of the company in estimating/accepting the value of the contract/sub-contracts, visit report of engineer, computation of cost, site photographs, travel expenses, actual working papers with respect to contracts/sub-contracts undertaken during the F.Y. 2009-10, 2010-11 and 2011-12,” added the order. “... there is prima facie suspicion of scale of business and that the revenue of the company was overstated to this extent resulting in misrepresentation of financials of the company,” it added. Shares of Parsvnath Developers lost over 4% on Wednesday to close at ₹12.39, which pegs the market capitalisation of the company at nearly ₹5400000000.