sebi:WTM/SM/IVD/ID2/6111/2019-20
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Facts / Headnote
Allegations found substantiated; directions issued barring the Noticee from issuing audit certificates and rendering auditing services to listed companies and SEBI-registered intermediaries for 1 year
Provisions invoked
- s. 11
- s. 19
- s. 12
- s. 24
Regulations
- Reg. 3
- Reg. 4
Parties
- Mr. K P Joshi
Holding
The Noticee, statutory auditor of Coral Hub Limited, was found to have violated Section 12A(a),(b),(c) of the SEBI Act read with Regulations 3(b),(c),(d) and 4(1), 4(2)(e),(f),(k),(r) of the PFUTP Regulations by certifying inflated and misleading financial statements. He was barred from issuing any audit certificate or rendering auditing services to listed companies and SEBI-registered intermediaries for a period of one year.
Full text
Order in the matter of Coral Hub Limited Page 2 of 19 b) Investigation revealed that as per Annual reports of CHL, the amount of sales and profits reported by the Company for the financial years 2008-09 and 2009- 10 (till 30th June 2010) were as under:
Order in the matter of Coral Hub Limited Page 3 of 19 the sales were made to a few selected customers. The customer-wise sales reported by CHL for top five customers are tabulated as under: Table No. 3 Top 5 Customer wise sales reported by CHL (in ₹) Sr No. Name of the Party 2008-09 % of the sales to the total sales 2009-10 (12 months)* % of the sales to the total sales
Order in the matter of Coral Hub Limited Page 4 of 19 referred to as “FAO UN”) and N D S USA LLC were inflated by ₹ 38.22 crores and ₹ 32.99 Crores respectively. Accordingly, it was viewed that the cumulative sales figures with respect to the above two customers for financial years 2008- 2009 and FY 2009-2010 were inflated by ₹71.21 Crore, which was 51.90 % of the total sales of CHL for these two financial years. Accordingly, the figures of profit carried over into the Balance Sheet of CHL for the above two financial years were also inflated. The details of the above noted inflated sales in respect of FAO UN and N D S USA LLC are presented in the following table: Table No. 4 Inflated sales reported by CHL
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Source: SecMarx — sebi:WTM/SM/IVD/ID2/6111/2019-20. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.