SEBI bars Cressanda Railway Solutions' key management personnel on alleged financial manipulation

A detailed financial analysis revealed that Cressanda had no revenue from operations between FY2015 and FY2020.

The Securities and Exchange Board of India (SEBI) has barred Cressanda Railway Solutions along with some of its directors and key management personnel from accessing the securities market for alleged financial manipulation including engaging in bogus sales and reporting inflated accounts.

"It is noted that the company has been engaging in bogus sales and purchases of rice and IT related products and generating fictitious revenue to inflate its books of accounts," stated the order.

"The manipulation of books of accounts and financial statements resulting from apparently non-genuine purchase and sales transactions pertain to FY 2023. It is seen that such transactions continued to happen in FY2024 as well," it added.

Incidentally, in May 2024, SEBI issued an interim order against Varanium Cloud and its Managing Director for alleged mis-statement of financials.

This assumes significance because, as per the SEBI order, Cressanda is one of the entities with whom Varanium had executed allegedly fictitious transactions.

As per the SEBI probe, proceeds of a preferential allotment of warrants has been diverted by the Company and while payments by 28 allottees to Cressanda are still under examination, there is a prima facie case that certain notices were allotted shares against partial or no consideration in the above mentioned preferential allotments.

" There is a real possibility that once this Interim Order is issued, Noticees... may sell the shares allotted to them and make an exit. Thus, they need to be restrained from doing so.," stated the SEBI order.

While the Company had NIL or negligible revenue from operations from FY2015 to FY2022, the Company reported a quantum jump in its sales during FY2023 (sales of Rs.75.13 crore) through fictitious transactions, highlighted the SEBI order.

The company appears to have taken advantage of rigged financial statements to lure investors by creating a false narrative of the Company which is reflected by the fact that the number of public shareholders of the Company increased more than 20 times from 2,700 to 56,556 within a span of three years, it added.