Sebi passes order against Sanjay Dalmia and others in Golden Tobacco case, imposes penalty and bars from market

Sebi

The Securities and Exchange Board of India (Sebi) has passed a fresh order in the case of Golden Tobacco Limited (GTL), alleging fund diversion and misstatement of financials over the years. The order, issued on Friday, comes after a detailed investigation into alleged diversion of assets, misstatements and lapses in disclosures by the company and its key officials.

In its order, Sebi restrained Sanjay Dalmia, promoter of GTL, from accessing the securities market for a period of 2 years. The regulator also imposed a penalty of Rs 30 lakh on him for violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and the Listing Obligations and Disclosure Requirements (LODR) Regulations.  Similarly, Anurag Dalmia, another promoter and director, has been barred from the securities market for one-and-half year and fined Rs 20 lakh. The order also names Ashok Kumar Joshi, a former director of GTL, who has been prohibited from accessing the capital markets for one year and also ordered to pay a penalty of Rs 10 lakhs .

As per the Sebi order, GTL transferred Rs.175.17 crore to its subsidiary GRIL during the period FY10 to FY15 in the form of loans and advances and has been showing as outstanding in its annual reports. Sebi alleged that out of the total advance only Rs 36 crore was returned and the rest of the funds were diverted from GRIL to the promoter related entities.

Sebi alleged that the promoters and directors of GTL had entered into agreements relating to the company’s prime land assets without proper disclosures to shareholders. These included arrangements with third parties for sale or lease of land that were either not executed in the company’s best interest or were not transparently disclosed to the stock exchanges.

Sebi’s Quasi-Judicial Authority, N Murugan, noted in the order, “from the connection established among the promoter entities, they have been benefitted by the said diversion of funds”. He further noted that, “I also note that GTL is not a party/notice in the present proceedings. The promoter- connected entities are also not party in these proceedings. In view of this, no direction can be contemplated against GTL or the promoter connected entities”. Order noted, the funds diverted should be indirectly attributable to the shareholders. From that perspective, it can be considered as loss to the shareholders of GTL notionally

GTL, once known for its cigarette brands like Panama and Chancellor, had over the years transitioned into a company with significant real estate holdings, particularly in Mumbai and Delhi. In 2022, the company was admitted into insolvency after National Company Law Tribunal, Ahmedabad  ordered for commencement of Corporate Insolvency Resolution Process (CIRP) against the company.

Sebi had previously also passed adjudication orders against Anurag Dalmia, Sanjay Dalmia in October 25, 2013 and against others in February 14, 2014.