SEBI restrains Acropetal Technologies Ltd. and its Chairman and MD from accessing the securities market for two years

SEBI restrains Acropetal Technologies Ltd. and its Chairman and MD from accessing the securities market for two years

The Securities and Exchange Board of India (SEBI) has restrained Acropetal Technologies Ltd. and its Chairman and MD, D. Ravi Kumar (Noticees) from accessing the securities market, and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, and associating with the securities market for a period of two years.

The present matter emanated from several complaints received from the shareholders of Acropetal Technologies Ltd. alleging non-payment of dividend declared for the financial year 2011-12.

Pursuant to this, SEBI issued letter to the Company asking it to furnish information regarding declaration and payment of dividends under the Companies Act, 1956 and reasons if any, for default. The Company informed SEBI that they had not been able to pay dividend to the shareholders due to strain on the liquidity position of the Company.

The Whole Time Member (WTM) opined that at the end of March 2012, the Company had ample current assets including cash and cash equivalents amounting to Rs. 22.15 crore. The dividend should have been paid by October 28, 2012 i.e., about seven months from March 31, 2012 when the cash in hand of the Company was Rs. 22.15 crore. Considering this, the Dividend payout which was around 4.6 crore could have been easily done.

Further, even at the end of March, 2013 the cash and cash equivalents with the Company was 8,58,68,496. This was more than adequate to pay the dividend payable. However, the Company consistently avoided payment of the dividend to all the eligible shareholders, after declaration.

For the financial year ending March 31, 2012, the consolidated profit after tax was Rs. 44.89crore. Out of the said profits, provision was made for the payment of dividend and dividend tax. The balance profit amount was moved to the General Reserve and the Balance Sheet. Thus, even on a consolidated view, the Company and its subsidiaries seemed to be ingood shape.

In respect of the job profile of Ravi Kumar D, who is the Chairman and Managing Director of the Company, the Annual report stated that he is the only Executive Director on the Board and that he had been leading the Company since its inception and had been able to tide over many challenging situations and achieve growth.

Thus, it was clear that Noticee No.1, Ravi Kumar D, Chairman and Managing Director of the Company was instrumental in the management of the Company as the only executive director and KMP.

It was also opined that considering the financial statements of the Company, which created an impression that the Company's financial health was sound enough for a payout of Rs. 4.6 crore dividend; the non-executive independent directors could not be said to have failed to exercise diligence while resolving to declare dividend as members of the board.

The Whole Time Member concluded that the Company and its Chairman and MD, D. Ravi Kumar consciously avoided paying dividend to the shareholders, which was a serious violation.