Controversy Surrounds Rahul Yadav's 4B Networks as Info Edge Initiates Forensic Audit
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3 June 2023
Info Edge initiates forensic audit into 4B Networks, a prop-tech startup backed by Rahul Yadav.
Allcheckdeals India, a subsidiary of Info Edge, invested Rs 288 crore in 4B Networks but failed to receive the requested financial information.
The write-down of Info Edge's investment and the appointment of Deloitte as the forensic auditor demonstrates the seriousness of the situation.
Info Edge, a leading technology company, has made the decision to conduct a forensic audit into the operations of 4B Networks, a prop-tech startup backed by Rahul Yadav. This action comes after Info Edge wrote off its entire investment in 4B Networks due to the company's failure to provide the requested financial information. This blog explores the background behind this decision and sheds light on the circumstances leading up to the forensic audit.
Rahul Yadav, known for his controversial tenure as the founder of Housing.com, faced termination from the company following public clashes with investors. After leaving Housing.com, Yadav briefly worked with Anarock before launching 4B Networks. His history of conflicts and controversial actions has contributed to the scrutiny surrounding his latest venture.
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Info Edge's subsidiary, Allcheckdeals India, invested a total of Rs 288 crore in 4B Networks, consisting of Rs 276 crore in shares and Rs 12 crore in debt financing. However, Allcheckdeals has repeatedly requested specific financial details, including transactions with related parties, from 4B Networks, as required by their contractual agreement. Despite multiple requests, the necessary information has not been provided, nor have inquiries from Info Edge been addressed.
In the previous quarter, Info Edge announced the complete write-down of its investment in 4B Networks due to factors such as excessive cash burn, liquidity challenges, and uncertainties regarding funding options. With the continued lack of response and compliance from 4B Networks, Allcheckdeals has chosen to exercise its contractual rights. As a result, Info Edge's subsidiary has initiated a forensic audit to investigate the affairs of 4B Networks.
To conduct the forensic audit, Info Edge has appointed Deloitte Touche Tohmatsu India LLP as the forensic auditor, in accordance with the shareholders' agreement and articles of association of 4B Networks. This decision underscores the seriousness with which Info Edge is approaching the situation and its commitment to uncovering any irregularities or undisclosed information.