According to a financial report filed by the company on stock exchanges, it said that “The company has filed an appeal with the Securities Appellate Tribunal against the aforesaid order of Sebi".Adding that the company is firm that all transactions were entirely legitimate and in compliance with law and applicable accounting standards.
The regulator in its October order had imposed a penalty of ₹2.25 crore on the company and restrained Bombay Dyeing and its promoter Nusli Wadia, Ness Wadia and Jehangir Wadia from accessing the securities market for a span of two years for allegedly inflating the company’s financial statements. Additionally, a fine of ₹11 crores was levied on three of them for being involved in a fraudulent scheme of misrepresenting the company’s financial statements from FY 2011-12 to FY 2017-18.
The others banned and penalised are - Scal Services Ltd, a Wadia Group company, its then directors D S Gagrat, N H Datanwala Shailesh Karnik, R Chandrasekharan, and Durgesh Mehta, who was joint managing director and chief financial officer of Bombay Dyeing.
This comes after the market regulator received multiple complaints seeking an investigation in the affairs of the company.
Sebi discovered that these entities were involved in a fraudulent scheme of misrepresenting the financial statements of BDMCL, by inflating sales of ₹2,492.94 crore and profit of ₹1,302.20 crore resulting from the alleged sale of flats (through memoranda of understanding or MoUs) by BDMCL to Scal during FY 2011–12 to 2017–18.
The regulator’s probe highlighted that Scal’s ownership structure was intentionally created so that Bombay Dyeing could exert total control over the company’s share capital despite directly owning only a 19% stake. Bombay Dyeing did this by indirectly owning shares in other Scal shareholders.
In order to prevent the concept of “Associate Company" from being attracted and preventing the financial statements of Scal from being required to be consolidated with those of the company, the direct shareholding of Bombay Dyeing in Scal was purposefully kept at 19%.
Last week, the regulator had imposed a penalty aggreagting to ₹59 lakh on nine individuals in a case relating to alleged fraudulent scheme of misrepresenting financial statements of Bombay Dyeing and Manufacturing Company Limited.
These individuals were either members of the audit committee of Bombay Dyeing or chief financial officers of the company at the time when such violations took place.
