Sebi has barred five entities, including Excel Realty N Infra and its promoters, from the securities market for up to two years and levied a fine totalling Rs 1.75 crore on them for being involved in a fraudulent scheme of misrepresenting the company's financial statements.
The barred entities are promoters of listed entity Excel Realty N Infra (Excel) -- Lakhmendra Chamanlal Khurana (Chairman & MD of Excel), Ranjana Khurana Lakhmendra and Arpit Lakhmendra Khurana -- and Pramod Yeshwant Kokate who was chief financial officer of Excel.
On the basis of a complaint received by Sebi, the markets watchdog conducted a detailed examination into the affairs of Excel Realty N Infra for the period from April 2016 to March 2021.
In its examination, Sebi found that the transactions executed by Excel with 24 seller parties amounting to around Rs 119 crore constituting approximately 66 per cent of the total assets of Excel from FY 2016-17 to 2020-21, were misrepresented in the balance sheet of the firm for the said period.
The regulator observed that Lakhmendra Chamanlal Khurana was the Chairman and Managing Director of Excel during the period FY 2016-17 to 2020-21 and both management and financial decisions were taken by him on behalf of Excel.
Ranjana and Arpit were the whole-time directors of Excel for the same period. Being part of the board of directors, they have approved the financial statements of the company and all the violations took place at the time when Khuranas were at the helm of affairs at Excel, Sebi said in the final order passed on Friday.
Also, Sebi found that Kokate was the CFO of Excel during the entire examination period and the certificates issued by him certifying that the financial statements of the company do not contain any false or misleading statement or figures and do not omit any material fact that may make the statements or figures contained therein misleading, turns out to be false.
He deliberately chose to furnish such false certificates to facilitate the scheme of fraudulent disclosure carved out by Khuranas', Sebi found.
By indulging in such acts, Lakhmendra, Ranjana, Arpit and Kokate violated the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules and disclosure norms.
According to Sebi, the consolidated financial statements of Excel for the FY 2016-17 to 2020-21 were misrepresented, since it ought to have made provisioning for the loans to its wholly-owned subsidiary (WOS) in terms of IndAS 109. On failure to provide for the appropriate provisioning, Excel flouted the norms.
In its order, the regulator also noted Excel has claimed that out of Rs 22.91 crore, Rs 8.98 crore has already been returned by WOS of Excel till July 19, 2023, and has produced certificates certifying the return of money from its WOS as supporting evidence in support of its claim.
Accordingly, Sebi directed Excel to take all steps to bring back the balance amount of funds outstanding from the WOS of the company within a period of one year.
Further, Sebi debarred Lakhmendra Khurana from accessing the securities market for two years and from being associated with any listed company as a director or key managerial personnel for a period of one year, while the regulator also restrained Ranjana, Arpit and Kokate from accessing the market for one year and Excel Realty for six months.
Overall, the regulator levied a fine of Rs 1 crore on Lakhmendra Chamanlal Khurana, Rs 25 lakh each on Ranjana and Arpit, Rs 15 lakh on Kokate and Rs 10 lakh on Excel Realty N Infra.
