Markets regulator Sebi has restrained Eskay K‘n’it India Ltd and its directors from accessing the securities markets and also slapped monetary fines on them for various market norm violations.
Sebi found that the financial statements of the firm for the investigation period contained misstatements and the same were not in line with the applicable accounting standards.
Sebi further noted non-disclosure of material information to exchanges.
The firm was obliged to disclose information related to investigation/filing of FIR by CBI pursuant to various complaints filed by various banks.
Among other violations, the firm also failed to furnish requisite information to the forensic auditor.
The regulator had passed an interim order in 2017 with directions against the firm and the officials and had also directed for appointment of an independent forensic auditor.
The violations have occurred over a period of three financial years.
Besides, Neha Nilesh Patil, Trivendra Shambhu Singh, Naresh Chandra Sharma, Manmohan Ahluwalia and Narayan Ghumatkar have been charged in their capacity as directors.
The firm has been barred from the securities market for a year while the directors have been restrained for six months to one year. In addition, the firm is facing a fine of Rs 30 lakh.
The directors have been levied penalties in the range of Rs 2 lakh to Rs 15 lakh each.
However, the directions against the firm will be given effect depending on the outcome of the resolution process since it is undergoing corporate insolvency resolution.
In a separate order, Sebi noted that Riddhi Siddhi Gluco Biols Ltd and some other entities, including senior officials of the firm, were part of a fraudulent scheme to show that the shares of the company were frequently traded to make the delisting offer successful at a fraudulently arrived price.
A proposal was submitted to BSE to provide an exit opportunity to public shareholders of the company by purchasing shares from public shareholders.
BSE granted in-principle approval for delisting of equity shares in February 2018 but in light of certain investors' complaints, the regulator advised the exchange to keep the delisting process on hold.
Thereafter, in a probe, Sebi discovered the fraudulent scheme and also found that the company was not in compliance with the minimum public shareholding (MPS) requirement from September 30, 2015 onwards.
Therefore, Sebi has directed the firm to comply with the MPS requirement and till then, the firm has been restrained from accessing the securities market.
Among other directions, the chairman and managing director Ganpatraj L Chowdhary and the whole time director Siddharth G Chowdhary shall remain barred from the markets till the expiry of two years from the date of the compliance of MPS requirement.
Sebi has also passed directions for barring access to securities market against 26 other entities.