Sebi Fines DB Realty And Promoters Rs 25 Lakhs For Financial Misstatements And Non-Disclosure

Sebi Fines DB Realty and Promoters Rs 25 Lakhs for Financial Misstatements and Non- Disclosure

Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 25 lakhs on eight entities, including DB Realty and its promoters, for violations involving financial misstatements and non-disclosures. The regulator fined DB Realty Ltd (now Valor Estate), its promoter and Chairman Vinod Kumar Goenka, and promoter Shahid Balwa Usman Rs 5 lakhs each. Additionally, a fine of Rs 2 lakhs was levied on other individuals, including Asif

Yusuf Balwa, Jayvardhan Vinod Goenka, Salim Balwa Usman, Sunita Goenka, and Nabil Yusuf Patel.

The Sebi order revealed that DB Realty failed to comply with accounting standards while preparing financial statements related to a guarantee provided to the Bank of India (BOI) for a loan taken by Pune Buildtech Pvt Ltd (PBPL). This non-compliance led to violations of listing agreements and disclosure rules. Sebi's Chief General Manager, G Ramar, noted that important event-based disclosures, such as non-performing asset (NPA) classifications, guarantee invocation, symbolic possession, and recall notices, were not appropriately disclosed.

Vinod Goenka and Shahid Balwa Usman, who signed the financial statements and the CEO/CFO certifications for FYs 2013-14 and 2014-15, failed to include material information in the postal ballot notice, misrepresenting that the borrower was fulfilling its loan obligations. They also failed to disclose significant events to stock exchanges, including the invocation of the guarantee and symbolic possession of company properties by BOI.

Sebi further observed that Asif Yusuf Balwa, part of the promoter group and a personal guarantor for PBPL's loan, was a signatory to the financial statements and also failed to comply with disclosure rules for FY 2017-18 to FY 2020-21. His actions were deemed misleading under Indian Accounting Standards (Ind AS 109), which contributed to the violations.

Other non-executive and non-independent directors, including Jayvardhan Vinod Goenka, Salim Balwa Usman, Sunita Goenka, and Nabil Yusuf Patel, also violated regulations for the years 2013-14 and 2014-15.

SEBI Fines DB Realty ₹25 Lakh for Financial Misstatements & Non-Disclosures

The order followed complaints received in December 2020 regarding PBPL’s Rs 225 crores loan from BOI, secured with corporate and personal guarantees. The complainant alleged that the loan was misused to clear dues of other group companies instead of its intended purpose.

By June 2020, the outstanding loan amount, including interest, had ballooned to approximately Rs 516 crores. Sebi’s investigation, covering the period from April 2013 to March 2021, sought to identify potential regulatory violations.