Others banned and penalized by SEBI are Scale Services Limited, a Wadia Group company, its then director DS Gagrat, NH Datanwala Shailesh Karnik, R Chandrasekaran and Durgesh Mehta, who was the joint managing director and chief financial officer of Bombay Dyeing. .
Others banned and penalized by SEBI are Scale Services Limited, a Wadia Group company, its then director DS Gagrat, NH Datanwala Shailesh Karnik, R Chandrasekaran and Durgesh Mehta, who was the joint managing director and chief financial officer of Bombay Dyeing. .
The Securities and Exchange Board of India (SEBI) has banned 10 entities including Bombay Dyeing and Manufacturing Company Limited and its promoters – Nusli N Wadia, Ness Wadia and Jehangir Wadia from securities markets for up to two years and fined a total of ₹ ₹ have put. 15.75 crore on him for his involvement in a fraudulent scheme of misrepresenting the financial statements of the company.
Others banned and penalized by SEBI are Scale Services Limited, a Wadia Group company, its then director DS Gagrat, NH Datanwala Shailesh Karnik, R Chandrasekaran and Durgesh Mehta, who was the joint managing director and chief financial officer of Bombay Dyeing. .
SEBI, in its order passed on October 21, said that they have been directed to pay the fine within 45 days.
Based on certain complaints, SEBI conducted a detailed examination of the affairs of Bombay Dyeing and Manufacturing Company Limited (BDMCL) for the period from FY 2011-12 to FY 2018-19.
In its investigation, SEBI found that these entities were involved in a misrepresentation of financial statements of BDMCL by inflating the sale of 2,492.94 crore and profit of Rs 1,302.20 crore arising from the alleged sale of flats (through Memorandum of Understanding or MoU). was involved in a fraudulent scheme. ) Scale up by BDMCL during the financial year 2011-12 to 2017-18.
The regulator noted that the shareholding structure of Scale was deliberately designed in such a way that although BDMCL directly held only 19% stake, through its indirect holdings in the other shareholders of Scale, BDMCL held the entire share capital of Scale. was able to have complete control over it. ,
“BDMCL’s direct stake in Scale was deliberately kept at 19% to ensure that the definition of ‘Associate Company’ is not attracted and, therefore, it will not be mandated to consolidate the financial statements of Scale with BDMCL. ”
“Had SCALE’s financial statements been consolidated with BDMCL, the above sales and profit of BDMCL from the transaction with SCALE would not have been reflected in BDMCL’s consolidated financial statements, as the mutual transaction between the two entities would have ceased. from being reported in the consolidated financial statements,” SEBI said in its 100-page order.
Further, BDMCL failed to disclose all physical transactions with its “related party” scale in the quarterly corporate governance compliance report.
Accordingly, SEBI has banned Bombay Dyeing, Nusli N Wadia, their sons – Ness and Jahangir – and Mehta from securities markets for two years, while one year for Scale and its then directors. Further, SEBI has barred Wadia and Mehta from being associated with securities market including directors or key managerial personnel in a listed company for a period of one year.
Wadia has played an active and willfully passive role in carrying out the plan to deliberately misrepresent the financial statements of BDMCL.
“Planned reduction of shareholding in Scale to avoid consolidation of the financial statements of Scale, execution of non-actual sales to Scale through MoU, Scale (and no other wholesale buyers), inflation of sales and profit of BDMCL, Non-recovery of payments from scale etc., were all different legs of a comprehensive ‘fraudulent scheme’ carried out under the supervision and control of Noticee No. 3, 4 and 5, (Wadia) when he was at the helm of cases in BDMCL ,” SEBI said.
Overall, the regulator fined Bombay Dyeing ₹2.25 crore, Nusli Wadia ₹4 crore, Jehangir Wadia ₹5 crore, Ness Wadia ₹2 crore, Mehta ₹50 lakh, Scaled ₹1 core and ₹25 . lakhs each on the then directors of the scale.