MC EXCLUSIVE SEBI flags fund diversion at Jindal Poly in NCLT filing, says promoters enriched at minority shareholders’ expense

SEBI flags fund fiversion at Jindal Poly in NCLT filing, says promoters enriched at minority shareholders’ expense

Market regulator Securities and Exchange Board of India (SEBI) has completed its preliminary investigation against Jindal Poly Films, based on investor complaints. SEBI has shared the 46-page finding to the National Company Law Tribunal (NCLT), New Delhi through an intervention application in the case. NCLT is hearing a class action suit filed by minority shareholders led by Ankit Jain and others.

SEBI alleges promoter group benefited at shareholder’s expense 

SEBI’s probe into Jindal Poly Films Ltd. for FY 2013-14 to FY 2023-24 found major irregularities in its dealings with group power entity Jindal India Powertech Ltd. Although Jindal Poly transferred its stake after a demerger, it continued funding the power venture through loans and preference shares worth Rs 690.27 crore, later fully written off. In FY 2021-22, part of this was written back and the investments were sold in March 2022 at just Rs. 1.492 per share, despite similar shares being acquired at Rs 10.02 only months earlier. SEBI concluded these actions benefited promoter-linked entities, causing losses of Rs 784 crore to Jindal Poly and its shareholders.

SEBI alleges value transfer to promoter group

SEBI also flagged how control of Jindal Powertech shifted within the promoter group. Jindal Finance held around 51.22 percent in Jindal Powertech for nearly a decade, bearing financial stress while the company had negative net worth. After a large one-time gain and improvement in the financial position of Jindal Thermal, which made Jindal Powertech significantly more valuable, the company issued fresh equity worth about Rs 106 crore to promoter-controlled Concatenate Advest Advisory Pvt. Ltd. (CAAPL). Jindal Finance did not participate, resulting in its stake dropping below control at around 49.93 percent, effectively transferring control of a business SEBI now values at about Rs 4,088.8 crore for just Rs 106 crore. SEBI’s findings noted, “With the new issue of equity shares, Jindal Finance’s stake has decreased to 49.93 percent, leading to loss of control over Jindal Powertech in favour of the promoter entity”.

SEBI says preference share terms were altered for promoter benefit
SEBI said the event sequence showed coordinated group decisions that reduced shareholder approval to a formality, and despite 98.64 percent public shareholders voting against the rights issue, it passed solely on promoter votes—reflecting poor governance and an intent to defraud minority shareholders of Jindal Finance. SEBI found that no emergency funding or capex need justified Jindal Powertech’s further issue and Jindal Finance’s waiver of control, noting that the raised funds were merely parked in low-yield debentures and bonds earning 5.04 percent to 7.2 percent.

Rs 366 crore consultancy payments to promoter-linked entities under scrutiny

Significant consultancy payments made by Jindal Poly have drawn SEBI’s scrutiny, with the regulator flagging Rs 366.12 crore paid to Soyuz Trading Co. Ltd. and Rs 155 crore to Packflex Business Advisory Services LLP as lacking genuine commercial rationale. SEBI found both entities to be closely linked to the Jindal Group, Soyuz operating as an NBFC type promoter entity and Packflex deriving 60–70 percent of its consultancy income from group companies. The regulator observed no substantial external clients, inconsistent financial patterns and the absence of any consultancy reports or documentation to justify the payments. SEBI findings stated, “Jindal Poly had submitted that it had not received any documentary advisory or consultancy report”. SEBI further said, “which indicates there were no consultancy services availed by Jindal Poly” but in the guise of benefiting Jindal Poly's promoters, Jindal Poly had transferred funds by labelling the transactions as consultancy services.

Staggered transactions masked impact on share price

SEBI’s application noted that the financial impact was spread over several years, masking the true extent of value erosion and preventing Jindal Poly’s share price from reflecting the actual loss. SEBI application stated, “the adverse financial impact, though significant in aggregate, was dispersed over time and did not manifest as a substantial loss in any single accounting period. Consequently, the share price of Jindal Poly did not reflect the true extent of value erosion”.

SEBI said the transactions-comprising write offs, conversion of loans into zero percent Redeemable Preference Shares at inflated valuations, and subsequent disposals were executed over multiple financial years. The staggered nature of these transactions prevented investors from getting complete sequence of events and the cumulative financial loss arising from it.

The lack of transparency regarding the interconnected nature of these dealings effectively obscured the material impact on shareholder wealth, thereby impeding informed investment decisions and in turn violating provisions of SEBI Act and rules.

SEBI justifies intervention, cites major impact on shareholders

SEBI said after examining multiple media reports suggesting securities law violations by the Company, SEBI initiated investigation into the transactions undertaken by Jindal Poly from FY 2013-2014 to 2023-2024 and completed its preliminary findings in October 2025.

SEBI justified filing its intervention application, stating that the petition’s outcome will significantly affect shareholders and the broader securities market. It added that its findings on financial mismanagement and securities law violations by Jindal Poly Films Ltd. must be placed before the Bench for adjudication of overlapping issues.

Jindal Poly Films denies allegations, says in full compliance

In its response to Moneycontrol said, Jindal Poly Films said it has not received any SEBI investigation order, cannot comment on unverifiable excerpts, and, with matters pending before NCLT, stressed that all transactions were lawful, it will cooperate with authorities. The response stated, “We wish to clarify that no order of investigation or communication detailing the alleged findings referenced in your queries has been served on Jindal Poly Films Limited by SEBI or their counsel till date. As such, we are unable to comment on selective interpretations or excerpts whose authenticity and context we cannot verify”. The statement further said, “All its transactions have been conducted in the ordinary course of business and in full compliance with applicable laws, including SEBI regulations”.

SEBI did not respond to email query regarding the issue. As a matter of policy SEBI does not respond to queries related to specific companies or in ongoing investigation matters.