Forensic audit of Chargers owners’ accounts begins

Forensic audit involves a thorough examination of the company’s financial position, especially for using the data in a court of law.

Hyderabad: The  noose is gradually tightening around debt-ridden Deccan Chronicle Holdings Limited (DCHL), the Hyderabad-based media house which owns IPL team Deccan Chargers, as bankers have begun the forensic auditing of its accounts to expose chinks, if any.

This was stated by DK Mittal, secretary, department of financial services in the Union finance ministry, in New Delhi on Tuesday. He said Canara Bank, the lead banker of the lenders’ consortium for DCHL, had begun the auditing process.

Putting DCHL in further trouble, the Bombay High Court on Tuesday directed that proceeds of the sale of the Chargers be deposited with ICICI Bank after paying five per cent to the Indian cricket board.

The order was passed by Justice SJ Kathawalla while hearing an application filed by Tata Capital against DCHL for recovery of a Rs 101 crore loan.


According to sources, forensic audit involves a thorough examination of the company’s financial position, especially for using the data in a court of law. “It would dig out the accounting frauds, if any, and enumerate total assets, as was done in the case of erstwhile Satyam Computers, in which a massive accounting fraud was unearthed,” an analyst said.

Mittal added: “We are aware of the situation in DCHL. We want to study systemic failure in the company,” he said.

Mittal’s statement came as a big embarrassment for the DCHL management, which is hoping to wriggle out of the financial mess by raising a few hundred crore rupees through the auctioning of the Chargers in Chennai on Thursday.

The move is set to derail the proposal of DCHL to go in for corporate debt restructuring (CDR) of its outstanding loans with the bankers. DCHL’s board has passed a resolution on asking the CDR cell to rejig its existing debt.

“The board of directors of the company, at its meeting held on September 7, 2012, has passed a resolution to restructure the existing debt of company by an application to Corporate Debt Restructuring (CDR) cell under CDR mechanism as envisaged under the Reserve Bank of India guidelines,” DCHL said in a filing to the Bombay Stock Exchange.

Hitherto, the outstanding debts of the DCHL were projected at Rs 3,200 crore, but Mittal on Tuesday declared that the total exposure of banks to DCHL stands at around Rs 5,000 crore, including Rs 3,800 crore to nationalised banks.

“These are just secured loans. There are even unsecured loans raised by DCHL from various financial institutions,” a company source said.

Efforts to reach the Canara Bank authorities in Hyderabad did not succeed. When contacted, Andhra Bank chairman and managing director BA Prabhakar said the forensic audit would expose a comprehensive picture of the company’s financial position.

“It is a thorough investigation into the company’s assets, liabilities, cash flow and sources of income. The bankers would study the cash flow and cash transactions,” he told MAIL TODAY.

Adding to the woes of DCHL, the Registrar of Companies (RoC) is also understood to have initiated a preliminary scrutiny of the books of accounts to find out accounting irregularities, if any, in the media group.

( With inputs from PTI)


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