Markets regulator Sebi has slapped a penalty totalling Rs 59 lakh on nine persons in a case pertaining to alleged fraudulent scheme of misrepresenting financial statements of Bombay Dyeing and Manufacturing Company Limited. These persons were either members of the audit committee of Bombay Dyeing or CFOs of the company during the violations. They have been asked to pay the fine within 45 days, Sebi said in its order passed on Monday.
The regulator conducted an investigation to ascertain whether the books of accounts of Bombay Dyeing and Manufacturing Company Limited (BDMCL) were manipulated for the financial years from FY12 to FY19.
The investigation revealed that BDMCL, by entering into various Memoranda of Understanding with its group company Scal Services Limited during FY12 to FY18 and by subsequently recognising revenue on the basis of such MoUs and not consolidating the transactions carried out with Scal, had inflated its sales and profits with respect to its real estate segment during FY12 to FY18 to the tune of `2,492.94 crore and `1,302.20 crore, respectively.
Sebi noted that because of the failure of these persons to carry out their responsibilities laid down in the LODR Regulations, the revenues and profit of BDMCL were inflated during the period from FY12 to FY18.