Lenders Name KPMG For Forensic Audit Of Srei Group

Lenders to Srei group have hired audit firm KPMG to conduct a forensic audit of Srei Equipment Finance and Srei Infrastructure Finance. Kolkata-based Srei group’s promoters have proposed a debt restructuring, and lenders tend to insist on a forensic audit before approving debt recasts that are not accompanied by a change in management. The lenders, led by UCO Bank, will decide on the restructuring, depending on the findings of the KPMG audit. Several audit firms had submitted proposals to be forensic auditors, and KPMG was selected after due process. The audit will study all transactions of both the non-bank lenders in the past three-to-four years to check for any anomaly. Bankers are already monitoring the cash flows of both companies, but the third quarter financial results have raised some red flags. In the notes to accounts of Srei Infrastructure Finance’s Q3 results, it has been pointed out that Srei Equipment Finance suffered a cash flow mismatch in the nine months to December 2020 and its net worth has declined, which may impact its ability to meet financial commitments. While Srei Infrastructure Finance owes ?11,117.71 crore to banks, Srei Equipment Finance owes ?16,912.21 crore, according to data from Care Ratings, which recently downgraded the ratings of both Srei firms to default. Srei will intimate the stock exchanges if and when there is a forensic audit. Srei has been in the business for over three decades with an impeccable track record, and over the last 31 years, it has paid more than ?30,000 crore as interest to banks and about ?20,000 crore as principal, always on time. We are currently in the midst of a dialogue with our creditors for an orderly realignment of payments, synchronized with our expected collections.