SAT relief for Bombay Dyeing and Wadias in Sebi market ban case


In a relief to and Manufacturing Company and its promoters Nusli Wadia, his sons and Jehangir Wadia, the (SAT) has stayed the effects of an order by the (Sebi) restraining them from the capital market for two years. The matter will be next heard in January 2023.

In an order dated October 21, had alleged that with the help of its associate company Scal had inflated revenues and profit by Rs 2,494 crore and Rs 1,302 crore, respectively, for a period from FY 2011-12 to FY 2017-18.

A counsel for argued that accounting standards do not require consolidation in accounting for Scal. He said that there has been no diversion of funds, no impact on share price, no findings of dealings in the securities, and there were no allegations of in Sebi’s show-cause notice.

Bombay Dyeing also requested the tribunal to allow its rights issue offer to be processed without any influence of the order as the company is starved for funds. doesn’t process fund raise requests in case an order or a show-cause notice has been issued.

A Sebi counsel argued that the rights issue offer was ‘engineered before the order’.

As Sebi’s order has prohibited the promoters from holding director or key managerial positions in any listed company or an intermediary, the counsel argued that it will affect other like Britannia and National Peroxide where they hold such positions.

The Sebi counsel alleged that it was an intelligent move to keep shareholding in Scal deliberately at 19 per cent’ to get through accounting standards. Bombay Dyeing counsel countered the argument that the shareholding was under a structure permissible by law and preferred by many .

Sebi counsel argued that the basic premise of the case remains that Scal was used to inflate revenues and profit of the company, and sales made to Scal were not genuine and were misleading to the markets. He added that Bombay Dyeing was the only shareholder in Scal through group and it was always controlled by the company. Moreover, flat sales shown by Bombay Dyeing have not been shown as purchases by Scal.

Along with the ban on promoters from accessing the securities market for two years, the market regulator had also slapped a cumulative penalty of Rs 15.75 crore on eight individuals and two entities, in the matter.


Source link

Comments are closed.