In one of its biggest penalties for non-disclosure of a key earnings ratio, the Securities and Exchange Board of India, SEBI today imposed a penalty of Rs. 13 crore on Reliance Industries Limited. 

The case dates back to April 2007 when alleged irregularities were reported in issuance of 12 crore warrants by Mukesh Ambani-led RIL to its promoters. It was alleged that this issuance had resulted in diluting the pre-issue paid-up equity share capital of RIL, but the company repeatedly failed to disclose a key earnings ratio for as many as six quarters.

Subsequently, SEBI began adjudication proceedings to probe the violation of relevant clauses under the Listing Agreement and the Securities Contracts (Regulation) Act for not disclosing the Diluted Earnings per Share - DEPS. As per the terms of the Listing Agreement, companies have to disclose DEPS in their quarterly statements filed with the stock exchanges.

SEBI has said that DEPS is a vital factor or one of the fundamental tools for the investors while arriving at decision to continue or invest in the shares of a particular company. 

Noting that a specific quantum of any direct or indirect unfair gain made by RIL and the loss caused to the investors were not available on records, SEBI said it cannot ignore the fact that millions of shareholders/investors were deprived of correct disclosures. 

This penalty comes a year after SEBI had imposed another fine of Rs. 11 crore on Reliance Petroinvestments, a subsidiary of RIL, in an insider trading case.