Order in respect of Fourth Dimension Solutions Limited and Mr. Amalendu Mukherjee in the matter of Ricoh India LimitedAddendum[SAT Appeal No.:148/2020]

WTM/GM/IVD/80/2019–20 SECURITIES AND EXCHANGE BOARD OF INDIA IMPOUNDING ORDER UNDER SECTION 19 READ WITH SECTIONS 11(1), 11(4)(d) AND SECTION 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT,1992 READ WITH REGULATION 10 OF THE INSIDER TRADING REGULATIONS,2015– IN THE MATTER OF RICOH INDIA LIMITED ENTITY PAN 1. FOURTH DIMENSION SOLUTIONS LIMITED AABCF7508A 2. MR. AMALENDU MUKHERJEE AMWPM2947A

BACKGROUND

1.1 Securities and Exchange Board of India(“SEBI”) had conducted an investigation in the scrip of Ricoh India Limited (“Ricoh/Company”) to ascertain whether or not suspected entities had traded in the aforesaid scrip during the period from August 14, 2014 to November 17, 2015 (“Investigation Period”) on the basis of unpublished price sensitive information (“UPSI”), in contravention of the provisions of the SEBI Act, 1992 (“SEBI Act”) read with the SEBI(Prohibition of Insider Trading) Regulations, 2015 (“Insider Trading Regulations, 2015”). 1.2 Ricoh was incorporated under the Companies Act, 1956 on October 22, 1993. The registered office of Ricoh is at 1132, 3rd Floor, Building No. 11, Solitaire Corporate Park, Guru Hargovindji Marg, Andheri Ghatkopar Link Road Chakala, Andheri East, Mumbai – 400093. The shares of Ricoh were listed on BSE Limited (“BSE”). The Company has been delisted from BSE in December 2019. 1.3 The promoters of Ricoh during the Investigation Period were as under –

Order in the matter of Ricoh India Limited

TABLE I [SOURCE: BSE WEBSITE] NAME NRG GROUP LIMITED RICOH COMPANY LIMITED

1.4 The Board of Directors of Ricoh during the Investigation Period was as under: TABLE II [SOURCE: BSE WEBSITE/ ANNUAL REPORTS] Appointment Cessation S.No. Name Designation Date Date Managing Director & April 1, 2011 March 31, 2015 CEO 1 Mr. T. Takano Non-executive April 1, 2015 July 25, 2016 director (Chairman) Mr. Manoj Managing Director & April 1, 2015 April 2, 2016 2 Kumar CEO Mr. D. C. Independent Director July 30, 2001 August 8, 2014 3 Singhania Mr. N. Majima Non-Executive July 23, 2008 April 1, 2015 4 Director Mr. U. P. Mathur Independent Director July 8, 2005 November 9, 5 2017 Mr. R. K. Pandey Independent Director June 27, 2008 November 9, 6 2017 Ms. Ashish Garg Independent Director July 23, 2014 November 9, 7 2017 Mr. H. Kitada Non-Executive March 1, 2013 December 21, 8 Director 2017

1.5 The shareholding pattern of Ricoh during the Investigation Period is as under:

TABLE III [SOURCE: BSE WEBSITE] Year ended Year ended Year ended Category of shareholder March 31, 2014 March 31, 2015 March 31, 2016 73.60% Promoter 73.60% 73.60% 26.40% Public 26.40% 26.40%

Total 100% 100% 100%

1.6 The revenue and net profit as disclosed in the annual and quarterly financial results of Ricoh for various quarters covering the Investigation Period are given below:

TABLE IV [AMOUNT IN ₹ CRORES] [SOURCE: BSE WEBSITE] QUARTER ENDED Description Dec Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 2015 Revenue 373.83 409.02 627.88 442.86 661.45 -273.10 Net Profit -2.83 10.55 41.48 0.40 -147.39 -102.04 1.7 BSR & Co., LLP (“BSR”), the statutory auditors of Ricoh, while conducting the limited review of the financial statements of the Company for the quarter and half-year ended September 30, 2015, raised suspicions regarding certain transactions between Ricoh and its customers & vendors and recommended further review of these transactions. 1.8 The Audit Committee of Ricoh appointed M/s. Shardul Amarchand Mangaldas & Co., Advocates & Solicitors who, in turn, appointed Pricewaterhouse Coopers Private Limited, India (“PwC”) to conduct forensic audit of the books of accounts of Ricoh for the half-year ended September 30, 2015. PwC submitted its report on preliminary findings on April 20, 2016, subsequent to which, on the same day, Ricoh informed SEBI that its financial statements for the quarters ended June 30, 2015 and September 30, 2015 did not reflect true and fair view of its state of affairs.

1.9 PwC submitted its investigation report dated November 17, 2016 to Ricoh, a copy of which, was forwarded to SEBI by Ricoh. The said report highlighted, inter alia, potentially fictitious transactions in the Information Technology Services (“ITS”) business of Ricoh during the half-year ended September 30, 2015. The report also stated that Fourth Dimension Solutions Limited (“FDSL”), a vendor as well as customer of Ricoh, had traded in the shares of Ricoh from August 22, 2014 to November 20, 2015 and liquidated its shareholding in Ricoh during the week of November 20, 2015, which happens to be around the time when BSR raised concerns relating to certain transactions with its vendors and customers. 1.10 With respect to the accounting manipulation, an interim order was passed by SEBI on February 12, 2018 against certain employees of Ricoh and Mr. Amalendu Mukherjee, inter alia restraining them from accessing the securities market. The directions in the interim order were confirmed vide order dated August 16, 2018. 1.11 Subsequently, SEBI appointed Pipara & Co. to conduct a forensic audit of the books of accounts of Ricoh as well as FDSL.

The forensic audit report dated October 25, 2019 from Pipara & Co. LLP also corroborated the involvement of Mr. Amalendu Mukherjee in the manipulation of sales and purchase of Ricoh.

UNPUBLISHED PRICE SENSITIVE INFORMATION –

2.1 The definition of ‘price sensitive information’ as prescribed under regulation 2(ha) of SEBI (PIT) Regulations, 1992 is as follows:

“price sensitive information” means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of company. 2.2 The definition of ‘unpublished price sensitive information’ as prescribed under Regulation 2(1)(n) of SEBI (PIT) Regulations, 2015 is as follows:

"unpublished price sensitive information" means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following: – (i) financial results; (ii) dividends; (iii) change in capital structure; (iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions; (v) changes in key managerial personnel. 2.3 Vide letter dated April 20, 2016, Ricoh disclosed that its financial statements did not reflect true and fair view of its state of affairs. The same was disseminated by BSE on April 22, 2016. The forensic audit report dated October 25, 2019, submitted by Pipara & Co, also noted that the financial statements of Ricoh were misstated from FY 2012-13 onwards. 2.4 In the instant case, knowledge of the act of manipulating / misstating the financial statements of Ricoh is considered as the UPSI, as the public was not aware that the financial statement of Ricoh, from FY 2012-13 onwards, did not reflect a true and fair view of the financial performance of the Company.

PERIOD OF UNPUBLISHED PRICE SENSITIVE INFORMATION –

3. The financial statements of the Company from FY 2012-13 onwards were misstated. This came into the public domain only when the said information was disclosed on the BSE platform on April 22, 2016. Therefore, the period from April 01, 2012 to April 22, 2016 has been considered as the UPSI period.

INSIDERS -

4.1 In terms of Regulation 2(e) of SEBI (PIT) Regulations, 1992, “insider” means any person who:

(i) is or was connected with the company or is deemed to have been connected with the company and is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or (ii) has received or has had access to such unpublished price sensitive information. 4.2 In terms of Regulation 2(1)(g) of SEBI (PIT) Regulations, 2015, ““insider” means any person who is: i) a connected person; or ii) in possession of or having access to unpublished price sensitive information;” 4.3 The forensic audit report dated October 25, 2019 from Pipara & Co. LLP inter alia corroborated the involvement of Mr. Amalendu Mukherjee in the manipulation of sales and purchases of Ricoh. During the forensic audit, various discrepancies were observed in the transactions done by FDSL with vendors and customers of Ricoh. Many of such vendors and customers were found to be connected to Mr. Amalendu Mukherjee. It was found that many of these entities did not communicate directly with Ricoh and instead, Mr. Amalendu Mukherjee was operating as a link between Ricoh and these entities. For example, a. Editable tax invoice and purchase order (‘PO’) of Rudra Enterprises, a customer of Ricoh, was shared by Mr. Amalendu Mukherjee with Ricoh in an email dated December 31, 2014 to allow Ricoh to edit the values and other details in the PO in order to manipulate sales of Ricoh. b. Further, a group of entities with which Ricoh had numerous transactions amounting to a large proportion of total revenue, was found to be related and under the same management. Some of these entities are Nike Sales Corporation, Redhex, PS Techno

Solutions Pvt. Ltd, Jatalia Global Ventures Limited, Jindal Infra Solutions Pvt. Ltd., Aastha Impex, etc. This inference was drawn because POs of these companies were shared with RICOH by Mr. Amalendu Mukherjee instead of being received directly from these companies. In addition to this, various other details such as PAN No., Bank details, Vendor Registration forms, invoices etc. were shared by Mr. Amalendu Mukherjee instead of direct communication with the respective entities. 4.4 In addition to the aforesaid findings of the forensic audit report, the access to the UPSI by Mr. Amalendu Mukherjee can be corroborated from the following events: a. Mr. Amalendu Mukherjee discontinued trading when BSR raised concerns in November 2016 regarding the financial statements of the company. i. M/s. Sahni Natrajan & Bahl were the statutory auditors of Ricoh for 13 years from FY 2001-02 till FY 2013-14. In FY 2014-15, the statutory auditors were changed to BSR & Co (part of KPMG network). BSR & Co. raised suspicions regarding certain transactions between Ricoh and its customers & vendors in October-November 2015, while they were conducting limited review of the financial results of Ricoh for the quarter ended September 30, 2015. Pursuant to this development, the Board meeting to consider and approve unaudited financial results for the quarter ended September 30, 2015, which was scheduled to be held on November 5, 2015, was rescheduled to November 10, 2015, which was again rescheduled to November 14, 2015. On November 15, 2015, the following disclosure of Ricoh was disseminated on BSE:

ii. “With reference to the earlier letter dated November 10, 2015, November 05, 2015 and October 13, 2015, Ricoh India Ltd has now informed BSE that the Limited Review for the Quarter ended September 30, 2015 is taking longer time in view of this being the first audit being done by our newly appointed Auditors. iii. As a result, the work relating to finalization and completion of Unaudited Financial Results and Limited Review Report of the Company for the Quarter ended September 30, 2015 could not be completed in Company's Audit Committee meeting held on November 14, 2015. Accordingly, Audit Committee and Board of Directors Meetings stand adjourned.” iv. Subsequently, FDSL sold 22,828 shares of Ricoh on November 17, 2015 and did not trade in its shares thereafter. b. Email from Mr. Amalendu Mukherjee to Ricoh; An email was sent by Mr. Amalendu Mukherjee on January 14, 2016 to Ms. Smriti Pandey (an employee of Ricoh). The email contained worldwide cases wherein KPMG was found guilty of being a party to manipulation of accounts of various companies. The suggestion of Amalendu Mukherjee to not have KPMG as auditors of Ricoh and continue with the existing auditors indicates his access to the insiders in Ricoh and his attempt to influence its decisions. c. Personal benefits extended to COO and CFO of Ricoh i. Mr. Amalendu Mukherjee extended various personal benefits to Anil Saini (then COO of Ricoh) and Arvind Singhal (then CFO of Ricoh) which indicates that he was in a position to influence the aforesaid insiders / KMPs of Ricoh by virtue of the benefits extended to them.

Some instances of the personal benefits extended to Anil Saini and Arvind Singhal are as under: ii. Mr. Amalendu Mukherjee paid tuition fees of Ms. Sheetal Saini, the daughter of Mr. Anil Saini, for her education in Singapore. iii. Mr. Amalendu Mukherjee financed the flight tickets for the families of Anil Saini and Arvind Singhal for a trip to Dubai. iv. Mr. Amalendu Mukherjee booked flight tickets for his family as well as the families of Anil Saini and Arvind Singhal for a trip to Aurangabad. 4.5 From the aforesaid observations, it is noted that Mr. Amalendu Mukherjee had influence over the insiders of Ricoh and had access to UPSI that the financial statements of Ricoh did not reflect a true and fair view of the financial performance of RICOH. Therefore, he falls under the definition of ‘insider’ both under SEBI (PIT) Regulations, 1992 as well as SEBI (PIT) Regulations, 2015.

TRADING WHILE IN POSSESSION OF UPSI

4.6 Mr. Amalendu Mukherjee, as the MD of FDSL, was authorized to place orders for FDSL as per the email dated October 23, 2019 from Kotak Securities Ltd. He traded in the scrip of Ricoh while in possession of UPSI. Therefore, FDSL and Mr. Amalendu Mukherjee were considered as the suspected entities. 4.7 The details of trades by FDSL on BSE in the scrip of Ricoh during the investigation period are as follows:

TABLE V [SOURCE: BSE]

Date Buy Qty Wt. Avg Buy Sell Qty Wt. Avg Price (in `) Sell Price (in `) 14-Aug-14 10,000 182.47 - - 19-Aug-14 5,000 202.47 - - 22-Aug-14 10,000 207.86 - - 26-Aug-14 21,500 240.49 - - 28-Aug-14 53,500 269.89 - - 9-Sep-14 7,610 262.25 - - 16-Sep-14 - - 82,610 284.51 17-Sep-14 16,701 279.33 - - 18-Sep-14 13,081 298.80 - - 19-Sep-14 102,730 315.46 - - 22-Sep-14 17,244 313.08 54 319.00 23-Sep-14 - - 30,200 312.59 26-Sep-14 36,498 294.01 - - 29-Sep-14 - - 18,604 300.32 30-Sep-14 - - 17,894 308.08 9-Oct-14 - - 70 305.20 14-Oct-14 61,672 292.15 - - 16-Oct-14 13,499 263.33 - - 17-Oct-14 - - 3,499 266.00 20-Oct-14 - - 26,420 254.38 28-Oct-14 - - 30,000 258.96 30-Oct-14 - - 20,000 279.16 12-Nov-14 76,905 297.36 4,176 301.65 13-Nov-14 139 291.96 - - 17-Nov-14 - - 11,979 299.75 18-Nov-14 10,000 295.15 1,730 296.80 19-Nov-14 - - 2,709 296.00 21-Nov-14 - - 6,134 294.00 24-Nov-14 24,341 303.34 - - 26-Nov-14 - - 20,765 316.35 27-Nov-14 - - 60,000 300.66 28-Nov-14 - - 31,104 315.88 3-Dec-14 - - 30,803 300.12 4-Dec-14 - - 3,939 305.00 5-Dec-14 - - 4,719 314.04 12-Dec-14 306 322.93 1,130 320.01 30-Dec-14 10,000 296.66 - - 31-Dec-14 2,100 298.14 - - 2-Jan-15 - - 2,100 308.70 5-Jan-15 - - 184 308.07 6-Jan-15 1,680 297.58 - -

8-Jan-15 21,650 316.10 8,348 314.62 9-Jan-15 - - 42,782 319.43 12-Jan-15 10,000 317.94 5,136 310.06 13-Jan-15 2,000 321.85 - - 14-Jan-15 5,000 322.70 - - 19-Jan-15 2,000 315.54 - - 20-Jan-15 2,000 316.17 - - 21-Jan-15 2,000 314.29 - - 22-Jan-15 4,000 316.61 - - 23-Jan-15 2,000 317.21 - - 30-Jan-15 2,000 307.23 - - 2-Feb-15 2,000 306.97 6,685 300.61 3-Feb-15 - - 681 298.81 4-Feb-15 2,000 298.46 25,000 292.09 9-Feb-15 25,000 297.78 7,812 289.41 10-Feb-15 20,000 299.27 - - 11-Feb-15 - - 63,889 334.88 12-Feb-15 10,000 369.20 35,000 353.46 13-Feb-15 59,597 444.46 4,811 430.00 20-Feb-15 3,000 489.56 79 470.01 23-Feb-15 100 489.69 - - 24-Feb-15 6,000 552.93 3,886 553.96 25-Feb-15 3,000 549.49 - - 26-Feb-15 - - 1,310 532.72 27-Feb-15 3,500 506.31 2,541 504.59 4-Mar-15 1,000 505.04 12,750 504.00 9-Mar-15 12,654 508.80 - - 12-Mar-15 5,300 503.52 700 500.07 13-Mar-15 1,000 517.93 2,211 521.23 17-Mar-15 2,000 500.66 - - 19-Mar-15 20,400 587.67 23,646 575.11 20-Mar-15 - - 1,276 597.03 23-Mar-15 7,000 578.68 613 575.34 25-Mar-15 1,500 551.88 - - 30-Mar-15 16,000 568.89 43,228 539.29 31-Mar-15 - - 45,000 548.43 25-May-15 31,000 840.90 6,087 842.50 26-May-15 24,700 880.99 - - 27-May-15 - - 22,679 881.18 29-May-15 - - 10,043 911.87 25-Jun-15 - - 6,391 1,007.40 17-Jul-15 2,000 989.75 - - 5-Aug-15 - - 172 1,040.64 6-Oct-15 10,000 949.40 - -

9-Oct-15 1,000 942.59 - - 17-Nov-15 - - 22,828 831.86 Total 816,907 379.17 816,407 392.77 * 500 shares were sold by FDSL off-market on June 4, 2015

CHARGES OF INSIDER TRADING -

5. FDSL and Mr. Amalendu Mukherjee have violated regulations 3(i) & 4 of SEBI (PIT) Regulations, 1992 r/w regulation 12 of SEBI (PIT) Regulations, 2015, regulation 4(1) of SEBI (PIT) Regulations, 2015 and section 12A(d) & (e) of SEBI Act, 1992. FDSL has also violated regulation 3A of SEBI (PIT) Regulations, 1992 r/w regulation 12 of SEBI (PIT) Regulations, 2015.

LOSS AVOIDED / WRONGFUL GAINS MADE BY FDSL AND Mr. AMALENDU MUKHERJEE–

6.1 The profit made from trading in the scrip of Ricoh by FDSL while in possession of UPSI is detailed below:

TABLE VI Transaction Buy Wt Buy Sell Wt Sell Value Unlawful Qty Avg Value Qty Avg (INR) gains Buy (INR) Sell made Price Price (INR) Market 8,16,907 379.17 30,97,49,007 816,407 392.77 32,06,60,499 Off market - - - 500 889.25* 4,44,625 Total 8,16,907 379.17 30,97,49,007 8,16,907 393.07 32,11,05,124 1,13,56,118 *The closing price of the date of off-market transaction, i.e. June 4, 2015, has been considered as the sale price.

6.2 Further, it was observed that Mr. Amalendu Mukherjee sold his entire shareholding of 22,828 shares at price of INR 831.86 per share on November 17, 2015 around the time when BSR & Co. raised suspicions regarding certain transactions between Ricoh and its customers / vendors and two days after the announcement dated November 15, 2015 by Ricoh adjourning the Audit Committee and Board of Directors Meetings for consideration of quarterly financial results ended September 30, 2015. 6.3 The corporate announcement pertaining to financial statements being untrue was made on April 22, 2016 at 19:13:40 at BSE. The closing price on April 25, 2019 (the next trading day) was INR 320.3/- 6.4 By offloading his entire shareholding on November 17, 2015, FDSL avoided a notional loss of INR 1,16,77,892/-, the details of which are as under:

TABLE VI Sell Qty Wt Avg Sell Price Closing price on April 25, Loss avoided 2016 (INR) 22,828 831.86 320.3 1,16,77,892

6.5 The total of unlawful gains and losses avoided by FDSL, while in possession of UPSI, was INR 2,30,34,010/-. 6.6 With the initiation of quasi–judicial proceedings, it is possible that the individuals/entities may divert the notional gains (subject to the adjudication of the allegation on the merits in the final order), which may result in defeating the effective implementation of the direction of disgorgement, if any, to be passed after adjudication on merits. Non–interference by SEBI at this stage would therefore result in irreparable injury to the interests of the securities market and the investors. It therefore becomes necessary for SEBI to take urgent steps of impounding and retaining the proceeds (notional loss/gains) made by FDSL, by way of an interim measure. 6.7 Accordingly, as an interim measure, an Ad–Interim Ex–Parte Order for impounding such alleged profits under Sections11(1) read with 11(4)(d) and Section 11B of the SEBI Act read with Regulation 10 of the Insider Trading Regulations, 2015 needs to be issued against FDSL and Mr. Amalendu Mukherjee.

ORDER –

7.1 In view of the foregoing, I, in exercise of the powers conferred upon me in terms of Section 19 read with Sections 11(1), 11(4)(d) and Section 11B of the SEBI Act read with Regulation 10 of the Insider Trading Regulations, 2015, hereby issue the following directions: A. A sum of INR 2,30,34,010/- shall be impounded jointly and severally from FDSL and Mr. Amalendu Mukherjee, being the amount of illegal gains made and notional loss avoided on account of trades carried out in the trading account of FDSL. 7.2 The persons/entities mentioned at paragraph 7.1 is directed to credit the aforesaid amounts to an Escrow Account [“Escrow Account in Compliance with SEBI Order dated March 17, 2020 –A/c (in the name of the respective persons/entities)”] in a Nationalized Bank, by marking a lien over it. Banks are allowed to transfer the amounts available in the bank accounts of FDSL and Mr. Amalendu Mukherjee to the aforesaid Escrow Account(s), for the purpose of complying with this Order. 7.3 Banks shall not allow debits from the bank accounts of FDSL and Mr. Amalendu Mukherjee, to the extent of the amounts impounded under paragraphs 7.1, until the Escrow Account(s) as stated above are opened by them and the amounts as stated are transferred.

Any debit beyond the said limit may be automatically permitted. Credits, if any, into the accounts may be allowed. Depositories are directed that no debit shall be made, without permission of SEBI, in respect of the demat accounts held by the aforesaid persons/entities. The Banks and the Depositories are directed to ensure that all the aforementioned directions are strictly enforced. 7.4 Further, FDSL and Mr. Amalendu Mukherjee are directed not to dispose of or alienate any of their assets/properties/securities, till such time the amounts are credited to the Escrow Account(s). Further, they are directed to provide, within 7 days of this Order, a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form and details of companies in which they hold substantial or controlling interest. 7.5 The prima facie observations/findings contained in this Order are made on the basis of the material available on record. In light of the alleged violations of the provisions of Sections 12A(d) and (e) of the SEBI Act and Regulations 4(1) read with 4(2) of the Insider Trading Regulations, 2015, by FDSL and Mr. Amalendu Mukherjee, this Order shall be treated as a Notice under Sections 11(1), 11(4) and 11B (1) of the SEBI Act calling upon them to show cause as to why certain directions shall not be passed against them, as proposed hereunder:

a. Direction to disgorge an amount equivalent to the total gains made/loss avoided on account of insider trading in the scrip of Ricoh India Limited along with interest;

b. Direction to restrain them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.

7.6 SEBI shall serve upon the aforementioned persons/entities all the relevant documents along with this Order, if sought by the Noticees. 7.7 The Noticees against whom this Order have been passed may file their replies to SEBI within 30 days from the date of receipt of this Order and avail an opportunity of personal hearing in the matter, if they so desire. 7.8 This Order is without prejudice to any other action that SEBI may initiate under the securities laws, as deemed appropriate, against the above mentioned persons/entities. 7.9 This Order shall come into force with immediate effect and shall be in force till further Orders. 7.10 A copy of this Order shall be forwarded to the Stock Exchanges, Depositories, Registrar and Share Transfer Agents and Banks to ensure necessary compliance

Place: Mumbai G. MAHALINGAM Date: March 17, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA