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Markets regulator SEBI has banned seven people, including Ricoh India MD and Chief Executive AT Rajan, from the securities market for falsifying the company’s accounts.
The auto-parts maker, backed by Japanese promoter Ricoh Co, did not present a “true and fair picture” in 2015-16 and ended up reporting losses of ₹1,118 crore in its financial statements for that fiscal. This led to a crash of more than 50 per cent in Ricoh India’s share price.
Late on Monday, SEBI passed an interim order in which it said there was an urgent need for it to intervene. The regulator not only barred seven officials of Ricoh India, but also appointed its own forensic auditor to examine the extent of fraud in the company.
The possibility of Ricoh’s accounting fraud being on the scale of Satyam Computers cannot be ruled out. SEBI believes the fraud could be larger than the estimated ₹1,118 crore.
“It is quite possible that the fraud is yet to be unravelled and it may run deeper than ascertained by company-commissioned forensic audits,” Sebi said.
The other six barred from market are T Takano, Manoj Kumar, Arvind Singhal, Anil Saini, Bibek Chowdhury and Amalendu Mukherjee. Takano and Kumar have held the positions of managing director and CEO of Ricoh India in the past.
SEBI found the conduct of six of Ricoh India’s former management personnel and one other “prima facie fraudulent and unfair in nature”. Sebi restrained them from accessing the securities market or buying, selling or otherwise dealing in the securities market.
On July 19, 2016, Ricoh India had admitted that its accounts appear to have been “falsified”, even as its Japanese promoter Ricoh Co proposed to recapitalise the firm for the loss.
SEBI also noted that starting from 2012, Ricoh’s financial health had been deteriorating, even after the infusion of funds by its promoters.
“The company has neither been able to become profitable, nor is it able to meet its financial liabilities. Also, Ricoh Japan has disclosed the possibility of additional losses from Ricoh India,” said the SEBI order.
Ricoh was audited by PwC India and its special internal investigation team for a period of six months starting FY15.
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