Capital markets regulator Sebi has imposed fines totalling ₹1 crore on Kalahridhaan Trendz Ltd (KTL) and its promoters after finding the SME company concealed a loan default and misled investors through false corporate announcements. According to reports from The Economic Times, the company was in the business of manufacturing and trading various types of fabrics and was listed on the NSE's SME platform Emerge. Sebi restrained KTL and its promoter and Managing Director Niranjan D Agarwal from the securities markets for two years, while directors Aditya N Agarwal and Sunitadevi Niranjan Agarwal have been prohibited for one year. The latest order follows an interim order passed by Sebi in February 2025, after examining the company's affairs from February 23, 2024 to December 15, 2024.
In a 57-page final order on Thursday, Sebi found that KTL failed to disclose its default in repayment of HDFC Bank credit card dues within the timeline mandated under the Listing Obligations and Disclosure Requirements (LODR) Regulations. As reported by The Economic Times, the company admitted during the proceedings that the disclosure should have been made but attributed the lapse to an inadvertent omission. However, Sebi rejected this explanation, observing that timely disclosure of defaults is a mandatory obligation as it enables investors to assess a listed entity's financial health. The regulator emphasized that the company's conduct flouted the disclosure rules and other Sebi norms, holding that disclosure is the bedrock of a fair and transparent securities market.
The regulator also found that the company's August 12, 2024 disclosure claiming receipt of an export order worth ₹115.5 crore from Bangladesh-based Beximcorp Textiles was made without adequate due diligence. According to The Economic Times, Sebi said it could not verify the existence of the entity or its claimed association with another Bangladesh-based entity, Akij Textile Mills Ltd, and held that the announcement was misleading. Sebi's Whole Time Member Amarjeet Singh stated that 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. The regulator noted that "this artificially inflated the price and volume of its scrip, luring unsuspecting investors into a false sense of confidence".
Sebi imposed fines in the range of ₹10-30 lakh on KTL and Agarwals, holding that disclosure is the bedrock of a fair and transparent securities market. As reported by The Economic Times, the regulator said KTL's conduct flouted the disclosure rules and other Sebi norms. Sebi also directed the NSE to ensure that appropriate action is taken in terms of the regulatory framework for non-compliance with the provisions of the LODR rules and the standard operating procedure for suspension and revocation of trading of specified securities, including initiating the process of compulsory delisting if warranted. The regulator emphasized that such violations misled investors and distorted the stock's price and trading volumes, demonstrating the serious impact of non-compliance on market integrity.
