Description

SEBI adjudication order against RTMCL and its officials for inflating sales and profits through artificial transactions and goods-less invoices during 2017-2020.

Summary

SEBI has issued an adjudication order against Rajasthan Tube Manufacturing Company Limited (RTMCL) and 10 individuals including company officials and independent directors for alleged violations of securities regulations. The case involves inflated sales and profits through artificial transactions using goods-less invoices during April 2017 to March 2020, following a complaint from Central GST authorities.

Key Points

  • RTMCL allegedly inflated turnover fraudulently by rotating goods-less invoices among related firms
  • Investigation period covers April 01, 2017 to March 31, 2020
  • 11 entities charged including company officials, promoters, and independent directors
  • Violations include fraudulent sales inflation and misrepresentation in books of accounts
  • Case initiated based on Central GST department findings on input tax credit fraud

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing SEBI regulations including PFUTP Regulations and LODR Regulations.

Compliance Requirements

  • Listed companies must ensure accurate financial reporting without artificial transactions
  • Independent directors must exercise due diligence in audit committee functions
  • Proper disclosure of related party transactions required
  • Books and accounts must reflect genuine business transactions only

Important Dates

  • Investigation Period: April 01, 2017 to March 31, 2020
  • GST Department Letter: March 03, 2023
  • Adjudication Order Date: September 2025

Impact Assessment

This enforcement action demonstrates SEBI’s commitment to maintaining market integrity by pursuing cases involving systematic financial fraud. The involvement of independent directors in the adjudication highlights the regulatory expectation for board oversight. The case may impact investor confidence in RTMCL and serve as a deterrent for similar fraudulent practices by other listed entities.

Impact Justification

Major enforcement action against listed company for systematic fraud involving artificial sales inflation and violation of multiple SEBI regulations