The Securities and Exchange Board of India (Sebi) on Friday sought explanation from Royal Orchid Hotels, its promoters and CFO on alleged misstatement of consolidated financial statements for financial year 2021-22, which the regulator claimed inflated profits by 167 per cent.
Issuing an interim order and show-cause notice to the firm, the markets regulator alleged that pursuant to the misstated financial results, the promoters offloaded over 4 per cent of their total shareholding.
Sebi has provided a period of 21 days to the company, promoters CK Baljee and Keshav Baljee, and CFO Amit Jaiswal to file their reply or objections.
The regulator said that following the misrepresentation in profits, the stock price surged over 170 per cent which allegedly led to gains of nearly Rs 21 crore by the promoters through stake sale.
The allegations, if proved, could lead to debarment from the securities market and associating with any listed company along with an order for disgorging the illegal gains.
It further added that the regulator has been able to gather evidence that the entities conceived and implemented a fraudulent scheme through the misstatement of financial results.
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The company has been directed to file a report detailing the changes to the consolidated financial statements for FY 2021-22 and its impact. The report has to be certified by a peer-reviewed Chartered Accountant, other than the Statutory Auditor.