Demand for forensic services on the rise

It is raining business for forensic investigation service providers who are looking to beef up their teams to tap the opportunities thrown open by the Indian market.

Most of the forensic investigation mandates come from the infrastructure sector, banking and financial services, pharmaceuticals, besides private equity space.

“There is a growing demand for forensic services in the Indian economy. We expect our practice to grow to 1,000 professionals by the end of next fiscal,” said Sandeep Dhupia, Partner and Head of Forensic Services for KPMG in India.

KPMG Forensics, launched in 1995, has 750 dedicated professionals in this practice, which is the largest not only in India but also within the global KPMG network.

The Reserve Bank of India’s norm, requiring forensic audit to be conducted before any company can avail corporate debt restructuring, has also led to increased demand.

Other sources of demand are sectors such as power, telecom, oil and gas, real estate, and urban infrastructure such as metro rail systems and airports, which have a revenue share or sub-contracting component. These sectors are plagued with issues of revenue leakages or cash leakages in the supply chain.

“We are seeing a increase in mandate from infrastructure space, not only limited to due diligence and measuring the right level of revenue share but also investigations of monitoring or end-use of funds”, said Dinesh Anand, Leader-Forensic Services, PwC India.

PwC India, which has more than 250 members in its forensic team, is looking to add another 100 professionals soon, Anand said.

Amit Bansal, Senior Director, Deloitte India, said the misconducts could happen during construction, when subcontractors misreport progress of a project, or where customers could be charged before a service is delivered.

In the road sector, there were developer clients who had subcontracted their toll collection operations and saw revenue leakage of 4-6 per cent at the toll plaza level. Bansal also cited cases where confidantes of promoters floated entities as vendors and awarded over-invoiced contracts. For instance, ₹180 crore was siphoned off in one case. In such cases, firms usually took disciplinary action and terminated the services, without pursuing legal action.

Vidya Rajarao, Partner, Forensic Services, Grant Thornton India LLP said, “We are expecting rapid growth in this area and are planning to double our team in less than 18 months.”

Grant Thornton, which has been providing forensic services in India for over a decade-and-a-half, has more than 25 professionals specialised in forensic investigations, forensic technology and disputes.

The demand is also being driven by recent changes in the company law, rise in cyber crime, overseas anti-bribery and foreign corrupt practices regulations applying to Indian subsidiaries of MNCs and Indian companies operating globally.

This, coupled with the rise and detection of corporate fraud in the Indian industry, both on account of employees and owners where private or public money has been invested, fuels the need for forensic services, KPMG’s Dhupia said.