Markets regulator Sebi on Monday barred Man Industries (India) Ltd and its three senior executives from accessing the securities markets for two years and imposed a fine of Rs 25 lakh on each of them for alleged financial misstatement.

Those penalised include Ramesh Mansukhani, Chairman of Man Industries; Nikhil Mansukhani, Executive Director; and Ashok Gupta, former Executive Director and current CFO, according to an order passed by Sebi.

In its order, Sebi noted that the financial statements of Man Industries (India) Ltd (MIIL) for the financial years 2015-16 to 2020-21 were "deliberately misstated".

According to Sebi, the misrepresentations, omissions, and concealments formed part of a scheme by which investors were deprived of the true financial picture of the company.

Sebi highlighted that MSPL, a wholly-owned subsidiary, was excluded from consolidation after FY 2014-15 without any explanation. This concealment, the order stated, suppressed group-level losses and liabilities while artificially inflating MIIL's profits.

"I therefore conclude that the financial statements of MIIL for FY 2015-16 to FY 2020-21 were misrepresented as part of a artifice, the effect of which was to present to investors a false picture of profitability, liquidity, and exposure group risks. Such conduct constitutes a fraudulent and unfair practice by Noticees," Sebi Chief General Manager N Murugan said in his order.

By indulging in such acts, the entities violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practice) norms and accordingly Sebi restrained the entities from accessing the securities market for a period of 2 years and levied fine on them.

The order came after a complaint received by Sebi alleging diversion of funds to subsidiaries and the non-consolidation of financial results to conceal losses.

Based on the complaint, Sebi initiated an examination that included a forensic audit into the affairs of MIIL. To assist with this process, a forensic auditor was appointed on November 22, 2021, to conduct a detailed investigation of the company's books of accounts for FY 2014-15 to FY 2020-21.

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