Sebi has barred Ltd and three individuals from the securities market for alleged manipulation of financial statements as well as siphoning off funds of the company. The three individuals — Suresh Venkatachari, R S Ramani and Gurumurthi Jayaraman — have also been restrained from associating themselves with any Sebi-registered intermediary till further orders.
Further, they have been barred from acting as directors or key managerial personnel of any listed public company or as promoters of any public company which intends to raise money from the public, according to a 76-page order passed by Sebi.
Sebi started a probe pursuant to certain complaints alleging irregularities by promoters and management in the company and the resignation of its statutory auditor, Deloitte Haskins and Sells, citing various corporate governance lapses.
The regulator initiated the investigation into the company’s affairs for the period 2017-18 to 2020-21 and found there manipulation of financial statements.
“I note that the facts of the case prima facie show that there has been a massive falsification of the books of accounts of the company and that the company has been publishing false and manipulated financial statements showing inflated revenue/profitability,” Sebi Whole Time Member Ashwani Bhatia said in the order passed on Thursday.
It has also been alleged that there was siphoning off funds to the tune of Rs 3.83 crore.
As per the order, Jayaraman as the erstwhile audit committee Chairman was aware of all the malpractices happening at the company and did not discharge his duties independently. He aided and abetted the management of the company in all the wrong doings, thereby violating disclosure norms, it noted.
Sebi observed that the promoter and promoter group shareholding in the company fell from 63.41 per cent as on March 31, 2017 to 38.20 per cent as on March 31, 2019.
According to the regulator, Venkatachari and Ramani have sold/transferred substantial quantities of shares when the scrip was trading at very high prices and made huge personal gains at the cost of unsuspecting investors who appear to have been lured into purchasing the company’s shares by publication of manipulated financial statements showing inflated revenue and profitability.
“Thus, the acts of the company and the other noticees were apparently driven by personal greed,” Bhatia said.
The noticees are the company and the three individuals.
Further, the order noted that the promoter and promoter group have increased their shareholding in the company to 43.52 per cent as on June 30, 2022.
“This increase in shareholding by the promoters may have been at a price far below the price at which they had earlier sold a large percentage of their shareholding.
“Having observed prima facie that the noticees by manipulating financials of STL, siphoning off funds of the company, not disclosing relevant information and making incorrect statements and representations etc and also benefitting personally… have prima facie committed serious breaches of various provisions of securities laws,” the order said.
While passing the directions against the company and the three individuals, Sebi has also asked them to show cause why inquiry should not be held against them for the alleged violations.
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