Prabhat Dairy churns

Prabhat Dairy is in trouble with SEBI. Yesterday, the market regulator asked the company to co-operate with the forensic auditor, Grant Thornton Bharat LLP and also deposit Rs.1292 crore in a nationalized bank with seven days, till the conclusion of the audit.

The forensic audit pertains to FY19 and FY20; to ascertain manipulation of books of accounts of the firm, misrepresentation of financials or business operations by the company, wrongful diversion of funds by promoters, directors or key managerial persons and business transfer and share purchase agreements.

SEBI had earlier noted that the company and its MD had consistently not cooperated with the audit and unless a proper audit is conducted, SEBI said that it will not be able to conclude whether or not the company indulged in mis-statement of accounts, diversion of funds to its subsidiaries/associates, etc.

SEBI said that though some information had emerged on the basis of a preliminary examination, only a detailed forensic audit could bring out the complete picture and the extent of the misstatement/misappropriation, if any.

The audit committee of the firm has to furnish a compliance report to Sebi in this regard by October 30, 2020.

The stock is actually in the green, as though in defiance and this news having no impact. It had closed yesterday at Rs.48.65 and today, it opened at Rs.57.05 and briefly skimmed the 20% UC of Rs.58.35 before coming down to Rs.52 levels.