Omaxe shares drop 5% after SEBI bars chairman, company from securities market

Omaxe shares fall: Shares of real estate firm Omaxe Ltd. plummeted by 5 per cent to hit lower circuit of Rs 152.20 on Wednesday following the Securities and Exchange Board of India’s (SEBI) decision to bar the real estate company, its Chairman Rohtas Goel, Managing Director Mohit Goel, and three other individuals from the securities market for two years. The action was taken due to irregularities in the company's financial statements.

On the BSE, Omaxe's stock hit the lower circuit limit, falling 4.99 per cent to Rs 152.20 per share. Similarly, on the NSE, the stock declined by 5 per cent to the lower circuit limit of Rs 154.19 per share. In contrast, the BSE Sensex index rose by 259.06 points, or 0.32 per cent, to 81,715.36 points, while the NSE Nifty increased by 44.40 points to 24,901.70.

The SEBI order, issued on Tuesday, restrains Omaxe, its Chairman, MD, and three others—Sudhangshu S Biswal, Arun Kumar Pandey, and Vimal Gupta—from the securities market for two years. Additionally, these individuals are prohibited from holding any position as Director or Key Managerial Person in any other listed company for the same period. SEBI also imposed fines totaling Rs 47 lakh on 16 entities, including these six, with penalties ranging from Rs 1 lakh to Rs 7 lakh.

SEBI's investigation found that these entities acted in concert to execute a fraudulent scheme, portraying false financial health while Omaxe was actually incurring losses. The company misrepresented its financial statements during the fiscal years 2018-19, 2019-20, and 2020-21, manipulating figures related to revenue, debtors, advances, and expenses. This misrepresentation helped maintain the stock price, which indirectly benefited the promoter by preserving the value of collateral against loans.

SEBI noted that these fraudulent activities were not disclosed to Omaxe's shareholders, misleading them and other investors in the securities market. As a result, SEBI has prohibited Omaxe and the involved individuals from accessing the securities market, buying, selling, or dealing in securities in any form, directly or indirectly, for two years.

The action follows a complaint alleging fraudulent transactions, fund diversion, financial misrepresentation, and inflated turnover by Omaxe. Due to the serious nature of these allegations, SEBI conducted a forensic audit covering the period from April 1, 2018, to March 31, 2021, corresponding to FY 2018-19, 2019-20, and 2020-21.