MUMBAI: The Ministry of Corporate Affairs (MCA) on Monday filed a petition with the National

Company Law Tribunal (NCLT) Mumbai to bar Deloitte Haskin & Sells and BSR and Co for a
period of five years for lapses in the audit of IL&FS Financial Services Ltd (IFIN).
MCA’s decision to prosecute the two audit firms -- BSR and Co, a KPMG affiliate and Deloitte
Haskin and Sells -- is based on a chargesheet filed by the Serious Fraud and Investigation Office
(SFIO) on 30 May.
The audit firms have been charged with concealing of information by not raising red flags on the
mis-statements in the accounts of IFIN. The SFIO chargesheet pointed to evergreening in the
accounts of IFIN and the auditors allegedly colluded and concealed the information.
Deloitte was the auditor of IFIN for 10 years starting 2008. Its tenure ended in 2018 due to
mandatory auditor rotation. This is when BSR stepped in. In 2017-18 Deloitte and BSR did a
parallel audit of IFIN.
With these auditors likely staring at a bar of five years, 276 of NSE listed companies will need to
look for new auditors. Among the two of them KPMG affiliates audit 150 NSE listed companies,
Deloitte audits 126 NSE companies, as per data compiled by NSE infobase, which is a part of Prime
Database, primary market tracker. The Big Four auditors have recently been on the receiving end of
regulatory action due lapses in their audit practices.
On 3 June, the Reserve Bank of India (RBI) barred audit firm S.R.Batliboi & Co. Llp, a member
firm of EY, from auditing commercial banks for a year starting 1 April, 2019, citing lapses in a
statutory audit. EY audits 143 NSE listed companies.
In what could make Air India sale an uphill task for the government, the national carrier could
report highest-ever loss of over ₹7,600 crore in financial year 2018-19 on account of low fleet
utilization and high fuel prices among others.
An official source said the total revenue in the previous fiscal stood close to ₹26,000 crore.
The airline has gone into losses ever since its merger with Indian Airlines in 2007. The massive
fleet order cleared by the UPA government continues to weigh on its books.
"In the first two months of the fiscal we have seen 20-25 per cent increase in our sales. If, restriction
from Pakistani airspace is withdrawn, we can still make operating profit," he said.
The airline's financial has shown signs of improvement following suspension of Jet Airways flights
in April.
The government had last year set the ball rolling for Air India's disinvestment offering 76 per cent
equity stake to private parties but the plan proved to be a damp squib -- not a single investor turned
up to submit expression of interest (EoI). This forced the government to put off the sale process.
It maintained that the plan would be taken up once the operating environment in the aviation sector
improved. Impending general election was another reason for putting the plan on hold.
As the Modi government has returned with a thumping majority, it is now keen to complete its
unfinished agenda from the previous term.
"The plan is to sell the airline within 100 days. The accounts for last fiscal is in the process of being
closed so that bidding process could start at the earliest. This time, the government is in no mood to
relent on the sale of Air India," an official source told IANS.
In order to sweeten the deal for Air India this time, the government is likely to offer entire 100 per
cent stake in the airline and consider transaction advisor EY's suggestion to transfer more debt to a
special purpose vehicle (SPV).