Authority: Adjudicating Officer, Securities and Exchange Board of India

Order Date: September 11, 2026

Case Overview

The adjudication proceedings were initiated against Emami Realty Limited (ERL), a listed real estate company, for alleged violations of securities laws related to financial disclosures and related party transactions. SEBI conducted an investigation covering FY14 to FY25 to examine possible misstatements in ERL's financial statements.

The principal allegations included:

1. Failure to disclose three entities (Emami Agrotech Limited, Add Albatross Properties Private Limited, and Sanjeevani Vyapaar LLP) as related parties and report financial transactions with them in consolidated financial statements for FY14 and FY15, violating clause 32 of the Listing Agreement read with section 21 of SCRA and Ind AS 18.

2. Failure to obtain prior audit committee approval for a related party transaction involving a ₹25 lakh loan to Lohitka Property LLP in August 2016, violating regulation 23(2) of LODR Regulations.

3. Incorrect classification of investments aggregating ₹49.94 crore (comprising ₹25.46 crore in equity investments in subsidiaries and ₹24.48 crore in convertible debentures of Prajay Urban Private Limited) as 'Inventories' instead of 'Investments' in standalone financial statements for FY22 and FY23, violating multiple provisions of LODR Regulations including regulations 4(1)(a)-(j), 33(1)(c), 34(3) read with Schedule V(B)(2), and 48.

ERL defended itself by arguing that the FY14-15 violations were too old and caused prejudice due to corporate restructuring (the company had merged with two subsidiaries in 2016 and changed its name from Emami Infrastructure Limited). For the Lohitka transaction, ERL claimed it was a continuation of pre-existing exposure authorized in 2015. For the inventory classification, ERL argued it reflected the economic substance of their real estate business model.

Final Outcome

The Adjudicating Officer found:

  • The FY14-15 related party disclosure violations were not established due to the time lapse (11-12 years) and ERL's status as a successor entity post-corporate restructuring.
  • ERL violated regulation 23(2) of LODR Regulations by failing to obtain prior audit committee approval for the ₹25 lakh loan to Lohitka Property LLP in August 2016.
  • ERL violated multiple LODR Regulations by incorrectly classifying ₹49.94 crore of investments as inventories in FY22-23 financial statements.

A penalty of ₹2,00,000 (Two Lakh rupees) was imposed under section 15HB of the SEBI Act for the established violations. The penalty must be paid within 45 days of order receipt, with recovery proceedings possible for non-payment.

Topics: SEBI Enforcement, Financial Disclosure Violations, Related Party Transactions