Sebi imposes Rs 58.5 crore penalty on Seya Industries’ top executives for financial fraud and fund diversion

Markets regulator Sebi has imposed a total penalty of Rs 58.5 crore on four senior officials of Seya Industries Ltd, including promoter and Chairperson Ashok Rajani and his son, Amrit Rajani, for allegedly siphoning off funds and falsifying financial statements over multiple years, news agency PTI reported.
In its final 122-page order issued Friday, Sebi found that Seya Industries diverted Rs 81.26 crore to companies linked to the promoter family — namely Whiz Enterprises, Aneeka Universal, and Shri Balaji Entertainments — under the guise of sales and purchases, or via undisclosed fund transfers during FY19, FY20, and FY21. These transactions were concealed and not reported as related party transactions in the company’s financial statements, violating several regulatory norms.
The regulator levied a Rs 28 crore fine each on Ashok Ghanshyamdas Rajani (Chairman and Managing Director) and Amrit Rajani (CFO), Rs 2 crore on Executive Director Asit Kumar Bhowmik, and Rs 50 lakh on Executive Director Sivaprasada Rao Buddi.
Sebi said Seya Industries also falsified its financial records for FY19 and FY20 through fictitious sales and purchases, in violation of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules and disclosure obligations.
Further, Sebi highlighted that the company’s accounting for interest in FY20 through FY22 and the quarters ending June, September, and December 2022, was not compliant with Indian Accounting Standards.
Despite these findings, Sebi clarified that no punitive action is currently being taken against the company itself due to the ongoing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). The regulator said it will address the case against the company in a separate order.
Sebi observed that Ashok Rajani, being at the helm of Seya Industries, was deeply involved in the day-to-day operations and personally signed off on misleading financial statements for four consecutive fiscal years. His son, Amrit Rajani, was held equally responsible for overseeing financial irregularities.
“I note that Amrit Rajani, being CFO of the company and looking after the day-to-day affairs of the company, was a KMP of the company at the relevant time and thus, is responsible for the violations committed by the company,” Sebi Whole-Time Member Ananth Narayan G said in the order.
Executive Directors Bhowmik and Buddi, tasked with ensuring compliance and accurate financial reporting, were found to have failed in their responsibilities, damaging investor trust in the securities market. Both were found to have violated insider trading, PFUTP, and disclosure rules.
All four individuals — Ashok Rajani, Amrit Rajani, Bhowmik, and Buddi — have been barred from accessing the securities markets for five years. They are also prohibited from holding positions as directors or key managerial personnel (KMP) in any listed company or Sebi-registered intermediary for the same duration.
Additionally, Sebi has directed Amrit Rajani to ensure that the Rs 81.26 crore siphoned off through promoter-linked entities is returned to Seya Industries within six months, along with 12% annual interest from the date of diversion.
The action follows complaints filed between 2020 and 2021 by SC India Fund Manager, which accused the company of raising funds through private placement based on inflated financial statements. After Seya failed to cooperate with the National Stock Exchange (NSE), Sebi appointed Ernst & Young in September 2021 to conduct a forensic audit. The investigation focused on the financial years ending March 2019, 2020, and 2021.