Man Industries shares crash over 16% as SEBI bars firm, top officials from securities markets; check details

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 an artifice, the effect of which was to present to investors a false picture of profitability, liquidity, and exposure to 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 a 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.

What Man Industries said post SEBI order

In its disclosure after the SEBI order, Man Industries said the penalty is minimal in nature when compared to the size and operations of the company and has no impact on the day-to-day functioning of the business.

"The company continues to have a strong order book of over ₹4,700 crore and remains fully operational. The company does not engage in any trading activity in securities markets, and therefore, the directions relating to restraining from accessing the securities market have no impact on its core business operations," it added.

About Man Industries

Man Industries (India) Limited is engaged in the business of manufacturing, processing, and trading submerged arc welded pipes and steel products. The company offers longitudinal submerged arc welded line pipes for use in oil, gas, petrochemicals, fertilisers, and dredging, and helically submerged arc welded line pipes for use in oil and gas transportation, water supply, sewerage, agriculture, and construction, as well as for high-pressure applications.

It also provides various options of coating systems, which include external coating systems, internal coating systems, and internal coating systems.