Wadias, BDMCL likely to file appeal before SAT against Sebi order

Sebi has charged the violators under the Prevention of Fraudulent and Unfair Trade Practices Regulations for alleged misrepresentation of financial statements

Wadia-group owned Bombay Dyeing, and Manufacturing Company Ltd (BDMCL) may file an appeal before the Securities Appellate Tribunal (SAT) against the Securities and Exchange Board of India’s (Sebi) order barring the company and the promoters Nusli Wadia, sons Ness Wadia and Jehangir Wadia from accessing the securities market for two years.

In its order issued on Friday, Sebi has charged the violators under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) Regulations for alleged misrepresentation of financial statements. The markets regulator also slapped a cumulative penalty of Rs 15.75 crore on eight individuals and two entities.

Calling Sebi’s order a wrong interpretation of accounting practice, the BDMCL said, “In essence, SEBI has sought to interpret accounting standards and the depiction of validly prepared, approved and properly presented unqualified accounts between FY 2011-12 and FY 2018-19.”

In its order, the markets regulator said due to the misrepresentation of financial statements of BDMCL, the revenues and profit of the company were inflated by Rs 2,493.94 crore and Rs 1,302.2 crore, respectively, during the period from FY 2011-12 to FY 2017-18.

“The accounts in question had been presented by the management, reviewed by the Audit Committee and opined on by the statutory auditors,” the company added.

However, the company has claimed that they are of the firm view that all transactions were entirely legitimate and in compliance with the law.

“It is noteworthy that Sebi has categorically noted that the promoters made no benefits and there is no diversion of funds, and yet, has issued a far-reaching set of directions,” said the spokesperson.

The individuals charged have also been prohibited from being associated with the securities market, including directors or key managerial personnel in a listed company or an intermediary registered with Sebi.

According to the Sebi order, BDMCL allegedly indulged in dubious real estate transactions with its associate real estate entity Scal Services. Though the company held a 19 per cent stake in the company, BDMCL was directly or indirectly in control of the entire share capital of Scal.