SEBI imposes 3 Year Ban on Manpasand Beverages, restricts 3 Top Officials from Market

The Securities and Exchange Board of India ( SEBI ) has recently banned Manpasand Beverages Ltd ( MBL ) and three of its top executives from the securities markets for three years, and imposed a total fine of Rs 74 lakh for manipulating and misrepresenting the company's financial statements.

The markets regulator Sebi has prohibited Manpasand Beverages Ltd (MBL) and its three top executives from participating in securities markets for three years, alongside imposing a collective fine of Rs 68 lakh for manipulating and misreporting the company's financial statements. The order states that MBL's financial reports for the fiscal years 2018-19 and 2019-20 were tampered with and inaccurately presented.

Those restricted by Sebi include the company's promoter, Chairman and Managing Director (CMD) Dhirendra Singh, promoter and Executive Director Abhishek Singh, and Chief Financial Officer (CFO) Paresh Thakkar. Each of these four entities has been fined Rs 17 lakh, payable within 45 days, according to Sebi's 55-page order issued on Tuesday. Furthermore,

Dhirendra Singh, Abhishek Singh, and Paresh Thakkar are barred from serving as directors or key managerial personnel in any listed public company or any intermediary registered with Sebi for five years.

Additionally, former independent directors Milind Babar and Chirag Doshi were fined Rs 2 lakh each, while current independent directors Nishish Mobar and Bharti Naik were fined Rs 1 lakh each. Naik served as a non-executive director during the relevant period.

The investigation by Sebi was initiated following complaints in September 2019 from Bipin Rathod, then-chairman of MBL's audit committee. Sebi engaged Chokshi & Chokshi LLP to conduct a forensic audit of the company's financial statements for 2018-19 and 2019-20.

The audit report revealed numerous irregularities, including purchases from unregistered dealers without payments, overstated purchases and sales, transactions with non-compliant GST parties, sales to dubious entities, and inflated impairments, receivables, and fixed assets.

MBL's troubles began in May 2018 when its auditor, Deloitte, resigned. Things went from bad to worse in 2019 with the arrest of the company's top management.

Abhishek Singh, the Managing Director, and two others were apprehended for allegedly evading ₹40 crore in Goods and Services Tax (GST) through a scheme involving fake companies.

Following their arrest, a raid on MBL locations on May 23rd, 2019 uncovered the details of the ₹40 crore tax fraud on a ₹300 crore turnover.

Further investigation led to the arrest of Abhishek Singh's brother, Harshvardhan Singh, and the company's CFO, Paresh Thakkar.

"The financial statements of MBL for 2018-19 and 2019-20 were manipulated and the figures were significantly mis-stated," stated Sebi Whole Time Member Ashwani Bhatia. "This led to the publication of manipulated, untrue, and misleading financial results, misrepresenting the company's financial health to investors."

Sebi's investigation also uncovered that MBL had misappropriated proceeds from a Qualified Institutional Placement (QIP) in September 2016. Additionally, previous orders from March 2, 2023, highlighted deficiencies in internal controls and misleading financial statements for 2016-17 and 2017-18. However, these earlier findings were not considered in the current proceedings.

It was thus held by the SEBI that: –

“In view of the foregoing, I, in exercise of the powers conferred upon me in terms Sections 11, 11(4), 11(4A), 11A(1)(b)(i), 11B(1)and 11B(2) read with of Section 19 of the SEBI Act, 1992 and Rule 5 of the Adjudication Rules, hereby direct the following:

(a)Manpasand Beverages Ltd. (Noticee 1), Dhirendra Hansraj Singh (Noticee 2),Abhishek Dhirendra Singh (Noticee 3) and Paresh Thakkar (Noticee 10) are hereby restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, either directly or indirectly, in any manner whatsoever, for a period of 3 years from the date of this Order.

(b)Dhirendra Hansraj Singh (Noticee 2), Abhishek Dhirendra Singh (Noticee 3) and Paresh Thakkar (Noticee 10) are restrained from holding any position of director or key managerial personnel in any listed company or any intermediary registered with SEBI, or associating themselves with any listed public company or a public company which intends to raise money from the public or any intermediary registered with SEBI, in any capacity, fora period of 5 years from the date of this Order.

(c)If the Noticees 1, 2, 3, and 10 have any open position in any exchange traded derivative contracts, as on the date of the order, they can close out/square off such open positions within seven days from the date of this order.

The Noticees are, however, permitted to settle the pay-in and pay-out obligations in respect of transactions, if any, which have taken place before the close of trading on the date of this order.

(d)The Noticees 1, 2, 3, 4, 5, 6, 7, and 10 are hereby imposed with monetary penalties under Sections 15HA,15HB and 15A(a) of the SEBI Act, 1992…”.

The Penalties sum up to the tune of Rs. 74 Lakh.

To Read the full text of the Order CLICK HERE

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