Shares of Omaxe declined 5 per cent each on the bourses on Thursday following Sebi restrictions on the realty firm, its Chairman, the MD, and three others from the securities market for two years for misrepresentation the company's financials.
Shares performance
Falling for the second straight day, Omaxe shares dived 5 per cent to trade at Rs 146.48 apiece -- its lower circuit limit -- on the National Stock Exchange (NSE).
On the BSE, it fell 4.99 per cent to Rs 144.60 per piece, also its lower circuit limit.
In the past two sessions, the company's shares declined 10 per cent on both bourses.
In the mid-session trade, the 30-share BSE Sensex rose 34.76 points, or 0.04 per cent, to 81,776.10, while broader NSE Nifty gained 31.95 points to 24,983.10.
Market regulator Sebi's order
Realty firm Omaxe said it will consider challenging market regulator Sebi's order on Tuesday that barred the company, its Chairman Rohtas Goel, MD Mohit Goel, and three others from the securities market for two years for misrepresentation in the company's financial statements.
"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," Omaxe spokesperson said in a statement.
"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".
The regulator has also levied a fine of Rs 47 lakh on 16 entities, including Omaxe, Rohtas Goel, Mohit Goel, and three others.
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".
Misrepresented financial statements
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.
The order came after 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 were serious allegations, 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.
