SEBI bars Golden Tobacco Ltd promoters for fund diversion, irregular financial practices

New Delhi, Aug 30 Golden Tobacco Limited (GTL) and its promoters have been subject of a new order from the Securities and Exchange Board of India (SEBI), which cited fund diversion, account misstatement, and disclosure violations. The order, which was issued following a thorough investigation, focuses on years of improper use of company assets and irregular financial practices.

Due to his violations of the Listing Obligations and Disclosure Requirements (LODR) Regulation and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulation, SEBI has banned Sanjay Dalmia, the promoter of GTL, from the securities market for two years and fined him Rs 30 lakh.

Another promoter and director, Anurag Dalmia, was fined Rs 20 lakh and banned for a period of one and a half years.

Additionally, Ashok Kumar Joshi, the former director, was ordered to pay a penalty of Rs 10 lakh and was banned from the capital market for a year.

The order states that between FY10 and FY15, GTL made loans and advances totalling Rs 175.17 crore to Golden Real Estate Infrastructure Limited (GRIL), a subsidiary. SEBI discovered that the remaining funds were transferred from GRIL to promoter-related entities, even though only Rs 36 crore was paid back.

The regulator also observed that GTL’s promoters and directors entered into agreements involving prime land assets of the company without making proper disclosures to shareholders. A number of agreements with outside parties for land sales or leases were either not optimal for the business or did not provide clear information to the stock exchanges.

The promoters profited from the money diversion, according to SEBI's Quasi-Judicial Authority N. Murugan.

He did clarify, though, that neither GTL nor the promoter-affiliated entities were parties to the current proceedings and that no explicit orders could be made against them.

However, according to the order, the money that was diverted was indirectly attributable to shareholders, meaning that they suffered a notional loss.

Once well-known for its cigarette brands, including Chancellor and Panama, GTL has steadily turned its focus to real estate, amassing sizeable land holdings in Delhi and Mumbai.

The company was admitted into insolvency proceedings in 2022 by the National Company Law Tribunal (NCLT), Ahmedabad, using the Corporate Insolvency Resolution Process (CIRP).

In this case, SEBI has already taken action, issuing adjudication orders against Sanjay and Anurag Dalmia in October 2013 and against other people in February 2014.

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