Markets regulator Sebi revoked restrictions imposed on 13 promoter entities of Kavit Industries after a forensic audit by the BSE found no evidence of misrepresentation of the financials of the firm.
In an order, the regulator said upon completion of forensic audit by BSE and subsequent receipt of forensic audit report and supporting papers by it, no evidence or supporting documents were found to substantiate the role of promoter entities with respect to misuse or misrepresentation in financials of Kavit Industries.
Hence, violation of provisions of securities laws were not observed in respect of the promoter entities, the Securities and Exchange Board of India (Sebi) said.
The promoter entities are Shree Saibaba Exim, Raghuvir International, Jaysurya Gases, Jagdish R Thakkar, Thakkar Kokila H, Hashmukhbhai Dhanjibhai Thakkar, Hansaben Jaswantbhai Thakkar, Mitul Jagdishbhai Thakkar, Santosh Kahar, Patel Bharatbhai Limjibhai, Somabhai S Thakkar, Jaswant Raichand Thakkar and Artiben Jayeshbhai Thakkar.
Kavit Industries was among the firms against whom Sebi initiated action in August 2017 by ordering trading restrictions, following receipt of a list of 331 ‘suspected shell companies’ from the government.
In September 2017, the regulator passed an interim order directing the BSE to appoint an independent auditor to conduct forensic audit of the company for verification, including its financials.
Besides, the promoters and directors of Kavit Industries were permitted only to buy the securities of the firm, while the depositories were directed to not allow the shares held by them in the company to be transferred for sale.
Later in February 2018, the regulator had confirmed the directions issued through the interim order against the firm and its promoters and directors.
The regulator said that considering the fact that there are no adverse findings against the promoter entities with respect to their role in misuse in financials of Kavit Industries, the directions issued against them through interim order need not be continued.
Further, Sebi said the revocation of the directions issued is only in respect of the promoter entities.
With regard to the remaining entities in the matter of Kavit Industries, the regulator said violations under the securities laws were observed and Sebi should continue its proceedings against them.