Bain, TPG ask for Lilliput audit report to be made public

Bain and TPG also asked the court to prevent Narula from threatening them and appoint a local commissioner to take possession of Lilliput's account books and other records, The Economic Times reported.

The petition highlights a number of financial irregularities, including alleged discrepancies between bank statements detailing the company's transactions and its audited accounts and bank ledger. Narula denied the allegations, saying, "Bain is trying to obstruct our deal with other PE firms and they want Lilliput to die."

Narula told local media in March that L Capital, the private equity arm of luxury goods giant LVMH, had made an offer for Lilliput that would facilitate the exit of Bain and TPG. He said that L Capital and another investor propose purchasing an 85-90% stake in the company, valuing the entire business at INR11 billion ($211 million). He would retain 10-15% and continue to be involved in management.

Bain and TPG invested $60 million and $26 million, respectively, in Lilliput in 2010. In recent years the company massively increased its debt exposure in order to finance expansion plans. It added 600,000 square feet of retail space in two years, equal to the total amount added over the previous eight years. Lilliput is thought to owe more than INR7 billion.

After Bain and TPG were informed about the alleged irregularities, Narula obtained a court injunction that prevented the PE firms from selling their stakes or discussing the matter publicly. It was announced in October that the company was seeking an out-of-court settlement with its investors. Amidst the controversy, Lilliput's planned INR8.5 billion IPO was shelved.

The court appointed SS Kothari Mehta & Co. to conduct an independent audit, but Bain and TPG claim there is evidence that Narula is still creating obstructions. Narula said he cooperated with the audit initially but stopped when SS Kothari started asking questions he deemed to be outside of its remit.

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• Topics
• South Asia
• Consumer
• Exits
• Regulation
• Bain Capital Asia
• TPG Capital
• India
• Consumer
• Exit
• regulation