SEBI Fines Kalahridhaan Trendz, Promoters Over Disclosure Lapses
The capital markets regulator SEBI has imposed fines amounting to Rs.1 crore on Kalahridhaan Trendz and its promoters for concealing a loan default and misleading investors with false corporate announcements.
Kalahridhaan Trendz Ltd (KTL) operates in the manufacturing and trading of different types of fabrics and is listed on the NSE's SME platform Emerge.
SEBI prohibited KTL along with its promoter and Managing Director Niranjan D Agarwal from participating in the securities markets for a period of two years. Directors Aditya N Agarwal and Sunitadevi Niranjan Agarwal are banned for a duration of one year.
In a 57-page final order on Thursday, SEBI determined that KTL did not report its default on HDFC Bank credit card payments within the timeframe specified by the Listing Obligations and Disclosure Requirements (LODR) Regulations.
The company acknowledged during the proceedings that the information should have been revealed but ascribed the oversight to an unintentional error.
Sebi, however, dismissed the explanation, noting that prompt disclosure of defaults is a necessary duty as it allows investors to evaluate a listed company's financial condition.
The regulator additionally determined that the firm's disclosure on August 12, 2024, stating it received an export order valued at Rs 115.5 crore from Beximcorp Textiles in Bangladesh, lacked sufficient due diligence.
Sebi stated that it was unable to confirm the existence of the entity or its purported link to another Bangladesh-based organization, Akij Textile Mills Ltd, and concluded that the announcement was deceptive.
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"The company first concealed the bad news of its default, and then compounded the harm by making misleading and fraudulent claims about its business and financial prospects.
"This artificially inflated the price and volume of its scrip, luring unsuspecting investors into a false sense of confidence," Sebi's Whole Time Member Amarjeet Singh said in the order.
Maintaining that disclosure is fundamental to a fair and transparent securities market, the regulator stated that KTL's actions violated the disclosure regulations and other Sebi standards.
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Consequently, Sebi levied penalties between Rs 10-30 lakh on KTL and the Agarwals.
Sebi also instructed the NSE to guarantee that suitable measures are implemented according to the regulatory framework for failing to comply with the LODR rules and the standard operating procedure for suspending and reinstating trading of designated securities, which includes starting the procedure for mandatory delisting if necessary.
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The recent directive comes after a temporary order issued by Sebi in February 2025, having reviewed the company's activities from February 23, 2024, to December 15, 2024.