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The Securities and Alternate Board of India has barred Bombay Dyeing Firm together with its promoter entities – Nusli Wadia, Ness Wadia and Jehangir Wadia – from the securities marketplace for a interval of two years for alleged misrepresentation of monetary statements for as many as six years beginning FY12.
The capital markets watchdog has additionally imposed a complete financial penalty of ₹15.75 crore on the corporate, the three members of the Wadia household together with few different people.
“… Noticees have been allegedly concerned in perpetrating a fraudulent scheme of misrepresentation of financials statements of BDMCL (Bombay Dyeing), that originated in FY 2011-12 and continued until FY 2018-19, with the merger of actual property enterprise of Scal with BDMCL,” acknowledged the 100-page lengthy Sebi order issued late on Friday.
The roots of the matter return to June 2011 when the capital market issued a present trigger discover to the corporate, its promoter entities and few different people primarily based on an investigation of the corporate’s monetary numbers for the interval between FY12 and FY19.
The crux of the matter was the corporate’s dealings with Scal Companies, an unlisted entity engaged in the actual property enterprise and owned – in the course of the interval of investigation – by numerous entities belonging to the Wadia Group.
The Sebi probe discovered {that a} main portion of the income from the actual property enterprise of Bombay Dyeing got here from bulk gross sales made to Scal Companies.
For example, dealings with Scal Companies accounted for 83 per cent of the full actual property income of Bombay Dyeing in FY14, whereas the share was pegged at 60 per cent in FY12 and 68 per cent in FY15.
The share dropped to 38 per cent in FY18 earlier than the actual property enterprise of Scal Companies was merged with the corporate in FY19, as per the Sebi findings.
Extra importantly, the Sebi order acknowledged that the shareholding of Scal Companies was maintained in a sure means solely to keep away from it coming beneath the ‘Affiliate Firm’ definition, which, in flip, would have pressured Bombay Dyeing to consolidate the monetary statements of Scal Companies with itself.
“Your complete shareholding of Scal was structured in a way to camouflage the precise shareholding of BDMCL in Scal. This structured method of devising the shareholding sample displays a deliberate try on the a part of BDMCL/ its Promoters to mislead the non-promoter traders of the listed entity. By holding its total shareholding in Scal by way of numerous different funding corporations of Wadia Group, BDMCL ensured non-consolidation of transactions carried out with Scal though exercising absolute management over Scal. Primarily based on the identical, the consolidated monetary statements of BDMCL are alleged to be unfaithful and deceptive for the shareholders of the listed firm in the course of the IP (investigation interval),” famous the Sebi order.
“… it has been alleged that BDMCL, together with Scal, executed a ‘nicely thought out and deliberate’ fraudulent and manipulative scheme to file non-genuine gross sales made to Scal to the tune of Rs. 2,492.94 crores and income to the tune of Rs. 1,302.20 crores throughout FY 2011-12 to FY 2017-18 by fraudulently coming into into MoUs with Scal, a Group Firm,” acknowledged the order handed by Sebi entire time member Ananta Barua.
The Wadia relations – Nusli, Ness and Jehangir – have additionally been barred from being related to any listed firm or a Sebi-regulated entity as a Key Managerial Personnel (KMP) for a interval of 1 yr.
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