On Monday, the Securities and Exchange Board of India (Sebi) issued sanctions against 12 entities, including Add-Shop E-Retail, a listed company, and several members of its promoter-management team, for purportedly manipulating financial statements.
According to the Sebi order, the company engaged in fictitious transactions, including fake sales and purchase entries in its accounts. Over the past three financial years, more than 46% of reported sales were found to be fictitious. Furthermore, significant related-party transactions were conducted without audit committee approval.
Add-Shop E-Retail was listed on BSE’s small and medium enterprise (SME) platform in September 2018 and later moved to the main board platform in October 2020. The promoter stake in the company decreased to 27.2% by December 2023, down from 62.99% in April 2020.
This regulatory action coincides with increased scrutiny on SMEs for potential manipulation and heightened monitoring due to concerns about fraudulent activities in the sector.