The B M Khaitan group has been in troubled waters for the past one year and its major firms — Eveready, McLeod Russel India and McNally Bharat Engineering — have been trying to bring down the group level debt.
While McLeod has been selling gardens, Eveready is working on a stake sale. McNally has submitted a restructuring proposal to lenders.
However, according to McLeod’s auditor, Deloitte Haskins & Sells LLP, liabilities of the company exceeded assets by Rs 1,435.66 crore as of March 2019 and in the last financial year it was unable to discharge obligations for repayment of loans and settlement of other financial and non-financial liabilities, including statutory liabilities. The auditor also raised concerns on the company’s ability to continue as a going concern. Further, rating agency ICRA, has recently downgraded McLeod to ‘default’ or ‘D’ category from B-/A4, factoring in recent delays in meeting debt obligations in a timely manner.
Also, last week, Price Waterhouse & Co Chartered Accountants LLP quit as auditor in Eveready, saying it has been unable to obtain sufficient audit evidence of inter-company deposits and its recovery. In its place, Singhi & Co Chartered Accountants has been appointed.
The development was in the wake of a difference of opinion between the auditor and the company on the recoverability of inter-corporate deposits given to group companies
and corporate guarantees given on behalf of group entities. These amount to Rs 512.26 crore.
Apart from a stake sale in the company, Eveready has been monetising other assets.