Kids Medical Systems Ltd - Disclosure Of Material Information About The Fraud Committed By Mr. Devendra Shah, MD Of Corporate Strategic Allianz Pvt. Ltd. (Penalised Merchant Banker By SEBI) Pursuant To The Regulation 30 Of SEBI (LODR), 2015

| Updated on November 06, 2018 Published on November 06, 2018

Scrip Code: 540812
Respected Secretary, BSE Limited and Stakeholders of the Company, we would like bring knowledge about the fraud happened post IPO of the Company in following manner;
Details of the communication with our auditors M/s. Doshi Maru and Associates, Jamanagar and fraud by Mr. Devendra Shah:
We would like to inform that, the auditors to our IPO was M/s. Doshi Maru and Associates, Jamanagar: FRN No: 0112187W (CA or CA firm or Audit firm for short). The Audit firm has good relation with M/s. Corporate Strategic Allianz Pvt. Ltd. and its MD Mr. Devendra Shah and therefore they had asked us to choose the Merchant Banker by Mr. Devendra Shah and they in turn had suggested M/s. Gretex Corporate Services Pvt. Ltd.. However, Mr. Devendra Shah has committed a serious fraud with the share application and allotment money received ( Misappropriation of funds) in the Bank Accounts of the Company and in this regards, the application has also been made to Economic Officers Wing, Mumbai.
Meanwhile, we were in a receipt of draft audit report from the C.A Firm. We had written a mail to our C.A dated 27th Aug 2018 pointing them that the person named Mr. Devendra Shah, who was the employee and M.D of Corporate Strategic Allianz Pvt Ltd (CSAPL),had siphoned off the funds raised through the IPO through various entities as mentioned in Appendix 2 and the transactions in Union Bank of India(UBI)having signed by Mr. Devendra shah, attached herewith.
We, the Board are responsible to the shareholders and also liable to bring true and fair view of the financials of the Company and therefore we had asked the Auditors to made the an adequate disclosure in the financial statement for the Financial year ended 31/03/2018 and the same also to be read out to inform the shareholders in the upcoming AGM.
The proofs are legitimate and the same we wanted to produce before our auditors vide a email dated 27th Aug 2018 and the auditors were called upon to investigate the facts and issue an appropriate report.
However the auditors abruptly resigned without assigning any reason and sent the Financial Statement and Auditors Report for the financial year ended 31/03/2018 with only the Auditor Signature and their stamp. However, We reasoned with them the fact, that the Board has not signed the same and without the signature of the Directors of the Company, the said CA has send Financial Statement with their signature which is also violation of the Companies Act, eventually the accounts could not be adopted by the Board.
We reasoned with them, to participate till the AGM is concluded correctly on 30th of September, 2018. We infact asked them to complete the audits by giving the information provided by us by 31st of August 2018 only (One month before), however they chose not to respond at all.
We have finally asked them to resign formally and correctly with the ROC in Form ADT 3 (Notice of Resignation by Auditor) Pursuant to section 140(2) of the Companies Act, 2013 and rule 8 of the Companies (Audit and Auditors) Rules,2014 , which they have not responded to over the last month, even after repeated follow-ups, (they have not responded to our calls nor mails.) The last email was on 2nd Oct 2018.

This behavior of theirs clearly reflects not only their non professionalism, but also complacency and complete disregard for the legal and compliance hygiene that a accounting firm should adhere to. Since the accounts were not adopted by the Board due to non-cooperation of the Auditor of the Company. The same could not be placed at the AGM.
The appointment of the new auditor has also got delayed as for the reasons mentioned above. We are in the process, of appointing an agency to kill the casual vacancy created by the auditors under section 139 (8) of the Companies Act, 2013 and issue the appropriate report.
In lieu of the same, we express our inability to conclude the AGM and sought an extension of three months from the ROC Ahmedabad however, it has rejected citing the reason not tenable.
We also, call and request upon the ROC to appoint a special agency to investigate the affairs of the company under section 206, 207, 208, 209 or other relevant sections of the Companies Act or any other laws for the time being in force whatsoever. As the same falls under the power of the ROC and the ROC can initiate it on a suo-moto basis and therefore we request to initiate the same on urgent basis.
This is in the interest of the shareholders we have, and would also like to bring the solution of auditors and merchant bankers who have the intent to defraud the shareholders.
We are also submitting the relevant proof, where Mr. Shashank Doshi a principal partner of Doshi Maru (Our C.A firm)is involved in the merchant banking and advisory activities which is prohibited to render such services under the new companys act, As the per the new companys act , the auditor cannot act as a financial consultant or as an advisor.

Appendix 1 :
1. Mail copy of our request to the auditors to mention the incorrectness of the information in the audit report tabled by them.
2. Their resignation on mail and reluctance to capture and participate with the directors information.
3. Financial Statement and Auditors report with the signature of the Auditors and without signature of the Directors of the Board of the Company. This Financial Statement and Auditors Report is accepted or approved by Board of the Company.
Appendix 2 :
1. Followup mail asking them to mention our information of fraud done by Devendra shah , M.D Corporate Strategic Allianz Pvt. Ltd.
2. Signing authority to use our accounts taken by Devendra shah, Mail and document attached.
3. Bank statement of Union bank of India, where it clearly shows the transfer of funds vie RTGS transactions done by Devendra Shah and siphoning of the funds.
4. Email asking The present C.A to formally give his resignation online, with the ROC, recent mail being 2/10/2018, no response.
5. Mail correspondence where Shashank doshi (who is main partner of the Doshi Maru and Associates) is corresponding with Mayur Parikh, one of the person working with of Devendra shah Corporate Strategic Allianz and he is also the director of Corporate Strategic Allianz to start our merchant banking process for the IPO.

Pdf Link: Kids Medical Systems Ltd - Disclosure Of Material Information About The Fraud Committed By Mr. Devendra Shah, MD Of Corporate Strategic Allianz Pvt. Ltd. (Penalised Merchant Banker By SEBI) Pursuant To The Regulation 30 Of SEBI (LODR), 2015

Source : BSE - www.bseindia.com

Published on November 06, 2018
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