Omaxe may challenge Sebi order barring company, chairman, MD from securities market for 2 years

New Delhi: Realty firm Omaxe will consider challenging market regulator Sebi's order that barred the company, its Chairman Rohtas Goel, Managing Director Mohit Goel and three others from the securities market for two years for misrepresentation in the company's financial statements.

The Sebi order had a negative impact on the company's share prices. The stock of the company on Wednesday declined 4.99 per cent to Rs 152.20 apiece -- its lower circuit limit -- on the BSE.

It fell 5 per cent to hit the lower circuit limit of Rs 154.19 per piece on the NSE.

Asked about the Sebi order and its future course of action, the Omaxe spokesperson said, "The company has not received any order from Sebi. Once received, the content will be verified and appropriate remedy available under the law, including filing of appeal will be contemplated." "As per news articles, it appears more in the nature of accounting interpretations, which were duly explained through documentation, market practice and case laws. Rest we will be filing our response to stock exchanges within the stipulated time frame, on receipt of order," the spokesperson added.

In its 126-page final order, Sebi has also restrained three others -- Sudhangshu S Biswal, Arun Kumar Pandey, and Vimal Gupta -- from the securities markets.

Additionally, these five persons have been "prohibited from holding any position as Director or Key Managerial Person of any other listed company for a period of two years".

Apart from these, the regulator has levied a fine totalling Rs 47 lakh on 16 entities, including these six. The penalties range from Rs 1 lakh to Rs 7 lakh, need to be paid within 45 days.

Sebi said these entities have "acted in concert in order to execute a fraudulent scheme that they tried to portray as normal transactions for the benefit of the company although it was experiencing loss, while also trying to portray these as merely lending activities, thereby trying to maintain the price of the scrip of Omaxe for a period of three years".

The company misrepresented the financial statements during 2018-19, 2019-20 and 2020-21 through its various items -- revenue, debtors, advances, and expenses.

"By the act of large-scale misrepresentation/misstatement/manipulation in financial statements by Omaxe, the scrip price was directly or indirectly manipulated to maintain the value of the collateral kept by the promoter against the loan," Sebi noted.

Furthermore, the fraud was never disclosed to shareholders of Omaxe, which misled them to remain invested in its shares or deal in its securities. Also misrepresentation of the books and accounts of Omaxe misled the investors in the securities market, it added.

Accordingly, Sebi has barred six entities, including Omaxe, Rohtas Goel, Mohit Goel, and three others from "accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two years".

The order came after the Securities and Exchange Board of India (Sebi) received a complaint against Omaxe alleging that the company conducted fraudulent transactions, diverted/siphoned of funds, misrepresented the financial statements, inflated turnover among others.

As these allegations were serious in nature, the matter was taken up for further examination by Sebi, including a forensic audit into the affairs of Omaxe.

The investigation period in the matter was taken from April 1, 2018 to March 31, 2021 that includes 2018-19, 2019-20 and 2020-21.