Securities and Exchange Board of India (SEBI) blocked Bombay Dyeing & Manufacturing Company (BDMCL) [BD:IN] from the securities market for two years after finding the enterprise, its sister company, and several executives had mispresented financial statements, as reported by Reuters on October 22. The SEBI also fined the above companies and individuals a total of INR157.5m (USD1.91m) for “being involved in a fraudulent scheme of misrepresenting the company’s financial statements”. In response to the penalty, the banned firms’ parent company, Wadia Group, claimed that all its transactions had been conducted in compliance with the law, and it will appeal against the SEBI punishments.
As one of the oldest conglomerates in India, Wadia Group engages in various industries including consumer goods, real estate, civil aviation, textiles, chemicals, and food processing. It has four subsidiaries listed on the Indian Stock Exchange, including BDMCL. According to SEBI’s accusations, BDMCL, along with Scal Services, a Wadia Group company, inflated sales of INR24.93bn (USD303.7m) and profits of INR13.02bn (USD158.7m) arising from the alleged sale of flats by BDMCL to Scal Services during FY2011-12 to 2017-18. In addition to the misrepresentation of financial statements, the SEBI also revealed that BDMCL failed to disclose all material transactions with its related party Scal Services in the quarterly corporate governance compliance report.