SAIF Partners accuses Catmoss of fudging funds

Promoters of kids’ wear brand Catmoss are now

being accused by the private equity investor SAIF Partners for fudging funds. The investor has approached the Delhi High Court to restrain Catmoss from activities such as: selling company assets and destroying its finance books. This is the second instance in kids’ wear segment of PE investors accusing a company of fudging funds. Leading kids’ wear retailer Lilliput’s owner Sanjeev Narula was also accused of fudging funds by its PE investors TPG and Bain Capital in 2011,

In a petition filed before the court, SAIF Partners, which holds 49 percent stake in Catmoss, has also accused company promoters including its MD Ashwani Chawla of fraudulently raising money without the PE firm's consent and alleged that they are doctoring the kids’ wear retailer's books and fudging the minutes of meetings.

Late last year, SAIF Partners told accounting firm KPMG to carry out a limited auditing of Catmoss Retail following allegations that the management mishandled Rs 100 crores it received from the PE firm and another Rs 100 crores raised through bank loans.

In January, Small Industries Development Bank of India, which had loaned Rs 7.5 crore to Catmoss in 2010, filed a winding up petition against the retailer in the Delhi High Court. SAIF hired KPMG to study the books of Catmoss after anonymous letters surfaced accusing Ashwani Chawla and a top official of SAIF Partners of wrongdoings.

In 2011, SAIF III Mauritius had invested Rs 115 crores in Catmoss to pick about 49 percent stake in the kids’ wear retailer that was expected to tap the markets through an initial public offerings in the fifth year of SAIF's investment.