Capital market regulator the Securities and Exchange Board of India (Sebi) routinely investigates companies that report suspiciously high growth in turnover and profits to detect possible frauds, the Parliament was informed today.
The 'Early Warning System' mechanism exists and it can be run on data available, Minister of State for Finance Namo Narain Meena said, responding to a written query in the Lok Sabha on whether the government keeps a watch on companies that show suspiciously high growth in turnover and profits.
This system, he added, is based on certain risk parameters like abnormal change in profitability compared to earlier years, to help detect fraud at an early stage.
"Sebi also carries out investigations on the basis of inputs received from various sources, including information on companies which show suspiciously high growth in turnover and profits," Meena said.
Also, exchanges as apart of their surveillance function, monitor trading activities of companies as also any substantial variation in company's figures, he said.
