Alok Industries faces banks' audit to trace use of Rs 20,000 cr loans

The Alok Industries stock fell 3.10 per cent on the BSE amid a report that SBI led lenders have sounded out firms such as Chokshi & Chokshi and Grant Thorton to carry a forensic audit of the firm.

The lenders' body will meet to take a final decision this week, The Economic Times reported on Monday.

The forensic audit differs from a statutory audit as it involves legal determination of fraud and naming persons behind such frauds.

A statutory audit usually is limited to express opinion as to true and fair presentation of a firm's financial statements.

The debt ridden Mumbai-based textile manufacturing firm has borrowed close to Rs 20,000 crore from banks in India.

The impending audit on the end use of loans taken by the manufacturing firm comes five months after tax firm Deloitte resigned as its auditor in an unusual move as few companies change auditors in the middle of the year.

According to a senior banker,  Deloitte quit immediately as an auditor after SBI officials held a meeting to discuss the financial position with a partner of the  Big 4 firm.

Deloitte refused to comment on the meeting. It said Deloitte does not comment on client confidential matters.

An executive director at Alok Industries Surendra Jiwrajka told ET Deloitte's resignation was purely commercial in nature.

He cited a hike in remuneration by Deloitte for its resignation as Alok Industries financial position was not healthy.

On the gaps in the financials, Jiwrajka said the banks have never sounded any alarm over the same and asked for a clarification in this regard.

Deloitte has given a no-objection certificate to Shah Gupta & Co, the chartered accountants firm which replaced Deloitte as one of the auditors of Alok Industries.