SEBI Slaps ₹1.35 Crore Penalty On Oriental Trimex For Manipulating Financial Statements

On Wednesday 18 February, the Securities and Exchange Board of India imposed monetary penalties totalling Rs.1.35 crores on Oriental Trimex Limited (OTL), its promoters and connected entities for manipulating financial statements and disseminating misleading disclosures to the stock exchange.

SEBI's Adjudicating Officer, Amit Kapoor (the AO) held that OTL had misled the investors and induced them to trade in its shares based on misleading financial statements. He wrote:

“I note that during FY18 to FY20 OTL had booked fictitious sales and purchase, thereby misleading the stakeholders, including investors of the company, which induced them to trade in the scrip of OTL based on misleading financials.”

The proceedings arose from an investigation conducted by SEBI into the financial statements of OTL for the period from April 2017 to March 2020 to examine whether the company had provided false or misleading financial information.

Upon finding prima facie violations by OTL and nine other noticees, SEBI initiated adjudication proceedings and appointed Mr. Kapoor as an Adjudicating Officer to conduct an inquiry. A show cause notice was issued in April 2025 proposing penalties under the SEBI Act. The noticees filed replies and were granted an opportunity of hearing.

The AO observed that, based on the data provided by OTL, it had entered into purchase and sale transactions with 22 entities during the investigation period. These transactions accounted for nearly 80%–85% of the company's revenue in certain financial years.

He wrote that “out of 22 entities, 5 entities were struck off by MCA. 18 entities were not found at their available addresses during the site visit.”

The order further records that some of the entities were interconnected and most of the transactions were made within the group itself. It was also noted that GST registrations of certain entities had been cancelled. The AO observed that “goods sold by the OTL to the group entities were ultimately sold to Noticee 5 and Noticee 6 and further, the same goods were sold back to the OTL by Noticee 5 and Noticee 6 through the other group entities in circular.”

He added: “I note that OTL had booked fictitious purchases and sales with 22 entities.”

The AO concluded that OTL had manipulated its books of accounts and financial statements for FY18 to FY20 by recording fictitious sales and purchases, and thereafter published and shared the same with the stock exchange.

While observing that it was not possible to quantify the exact monetary loss suffered by investors, the AO imposed penalties amounting to Rs. 1.35 crores on the company and the other noticees.