Sebi penalises Manpasand Beverages, its directors for flouting regulatory norms

It also imposed a penalty of ₹5 lakh Dhirendra Singh, Abishek Singh and Dhruv Agrawal (jointly and severally).

The order came after Sebi conducted an investigation with respect to the misstatement/manipulation of the financial statements of MBL for FY17-18.

The period of investigation was financial years ending March FY17-18 and the regulator observed that MBL had raised ₹400 crore through IPO in June 2015 and ₹500 crore through Qualified Institutional Placement (QIP) issue in September 2016.

The shares of the company are listed at both BSE and NSE.

During the investigation, an independent auditor was appointed as forensic auditor for conducting forensic examination of the books of accounts of Manpasand for financial years ending March FY17-18.

In its order, Sebi found that MBL deviated the QIP proceeds on two instances, ₹64 crore for clearance of outstanding balance against fixed deposit which was not mentioned in its QIP document.

It had also invested the proceeds in non-convertible redeemable debentures.

The document was subject to the review of audit committee, in accordance with the decision of board of directors as required under the LODR (Listing Obligations Disclosure Requirements) norms.

However, the audit committee has failed to monitor the utilisation of the issue proceeds.

Therefore, MBL, Dhirendra, Babar and Doshi — as part of the audit committee members have violated the LODR rules.

As per Sebi, there were certain differences in the quarterly statements which includes mismatch in capital advances as per books of account and quarterly statements. The difference was to the tune of ₹38.66 crore.

However, MBL admitted that there had been certain timing mismatch in recording the entries for QIP utilisation in the earlier statements submitted to the board as the company was in the process of receiving/verifying the bills from various parties.

In addition, Dhirendra and Abhishek have contended that though there was certain timing mismatch in recording the entries for genuine QIP utilisation, the same was reconciled at the year-end (FY 17-18).

Further, they contended that Manpasand has not deviated in use of the QIP proceeds from the object stated in the QIP document and there was nothing to be disclosed to the stock exchange or to furnish explanation in the directors’ report in the annual report under the LODR norms.

“As the company itself has accepted that there was timing mismatch in recording the entries for QIP utilisation in the statements. I do not find merit in the contention of Dhirendra and Abhishek Singh in this regard. Therefore, I note that the company has violated LODR rules and Securities Contracts (Regulations) act (SCRA),” Sebi’s Adjudicating Officer Sakkeena P V said in the order passed on Thursday.

Also, the regulator found that Agrawal had identified himself as the executive director of MBL and was responsible for a variety of executive functions such as signing off of financial statements and notes to accounts etc., which proves his involvement in various activities of the company, thereby violating the norms.

It also noted that the regulator sought information through summons from Dhirendra, Abhishek Singh and Paresh Thakkar which was very relevant to the investigation.

However, by non-complying and non-co-operation Dhirendra, Abhishek and Thakkar have not furnished the required information which hampered the investigation, thereby violating the market norms.