SEBI imposes Rs.13 crore penalty on RIL

Market regulator Securities and Exchange Board of India (SEBI) Friday imposed a penalty Rs.13 crore on Reliance Industries (RIL) for violating the listing agreement regarding disclosure of a key earnings ratio.

Companies are to disclose both basic as well as diluted earnings per share (EPS) ratio in the quarterly financial statements filed with stock exchanges.

"As the RIL had outstanding share warrants issued in April 2007 which got converted into equity shares only during the third quarter of Financial Year 2008-09, the RIL should have disclosed Basic and DEPS in the filings for the quarters ended June 2007, September 2007, December 2007, March 2008, June 2008 and September 2008," SEBI said in its order.

The violations date back to the 2007-09 period, when RIL had issued 120 million warrants to entities in the promoter group on preferential basis.

According to the regulator, on the conversion of these warrants into shares there was an increase in the paid-up share capital of RIL.

During a hearing in March, RIL had argued that there they did not disclose diluted EPS separately as the warrants were exercised at the fair value and there was no dilution of earnings.

The regulator's order stated that disclosure of EPS is "one of the important tools that investors use while making a decision regarding their investment in particular scrip"