Sebi imposes Rs 58.5 crore penalty on Seya Industries’ high executives for monetary fraud and fund diversion

Markets regulator Sebi has imposed a complete penalty of Rs 58.5 crore on 4 senior officers of Seya Industries Ltd, together with promoter and Chairperson Ashok Rajani and his son, Amrit Rajani, for allegedly siphoning off funds and falsifying monetary statements over a number of years, information company PTI reported.
In its last 122-page order issued Friday, Sebi discovered that Seya Industries diverted Rs 81.26 crore to corporations linked to the promoter household — particularly Whiz Enterprises, Aneeka Common, and Shri Balaji Entertainments — underneath the guise of gross sales and purchases, or by way of undisclosed fund transfers throughout FY19, FY20, and FY21. These transactions had been hid and never reported as associated social gathering transactions within the firm’s monetary statements, violating a number of regulatory norms.
The regulator levied a Rs 28 crore superb every on Ashok Ghanshyamdas Rajani (Chairman and Managing Director) and Amrit Rajani (CFO), Rs 2 crore on Govt Director Asit Kumar Bhowmik, and Rs 50 lakh on Govt Director Sivaprasada Rao Buddi.
Sebi stated Seya Industries additionally falsified its monetary information for FY19 and FY20 by means of fictitious gross sales and purchases, in violation of the Prohibition of Fraudulent and Unfair Commerce Practices (PFUTP) guidelines and disclosure obligations.
Additional, Sebi highlighted that the corporate’s accounting for curiosity in FY20 by means of FY22 and the quarters ending June, September, and December 2022, was not compliant with Indian Accounting Requirements.
Regardless of these findings, Sebi clarified that no punitive motion is at the moment being taken in opposition to the corporate itself as a result of ongoing insolvency proceedings underneath the Insolvency and Chapter Code (IBC). The regulator stated it is going to tackle the case in opposition to the corporate in a separate order.
Sebi noticed that Ashok Rajani, being on the helm of Seya Industries, was deeply concerned within the day-to-day operations and personally signed off on deceptive monetary statements for 4 consecutive fiscal years. His son, Amrit Rajani, was held equally chargeable for overseeing monetary irregularities.
“I be aware that Amrit Rajani, being CFO of the corporate and taking care of the day-to-day affairs of the corporate, was a KMP of the corporate on the related time and thus, is chargeable for the violations dedicated by the corporate,” Sebi Entire-Time Member Ananth Narayan G stated within the order.
Govt Administrators Bhowmik and Buddi, tasked with making certain compliance and correct monetary reporting, had been discovered to have failed of their tasks, damaging investor belief within the securities market. Each had been discovered to have violated insider buying and selling, PFUTP, and disclosure guidelines.
All 4 people — Ashok Rajani, Amrit Rajani, Bhowmik, and Buddi — have been barred from accessing the securities markets for 5 years. They’re additionally prohibited from holding positions as administrators or key managerial personnel (KMP) in any listed firm or Sebi-registered middleman for a similar length.
Moreover, Sebi has directed Amrit Rajani to make sure that the Rs 81.26 crore siphoned off by means of promoter-linked entities is returned to Seya Industries inside six months, together with 12% annual curiosity from the date of diversion.
The motion follows complaints filed between 2020 and 2021 by SC India Fund Supervisor, which accused the corporate of elevating funds by means of non-public placement primarily based on inflated monetary statements. After Seya did not cooperate with the Nationwide Inventory Alternate (NSE), Sebi appointed Ernst & Younger in September 2021 to conduct a forensic audit. The investigation centered on the monetary years ending March 2019, 2020, and 2021.