Sebi pulls up Rana Sugars for diverting funds to related parties, asks co to recover Rs 607 crore

Sebi's investigating officials found that the company's funds were diverted through conduit entities to unjustly enrich the company's promoters and their family members.

Capital market regulator SEBI has asked Rana Sugars (RSL) to recover more than Rs 607 crores from related parties, which includes from Rs 268 crores in interest dues and Rs 339 crores in receivables, and has been asked to pay Rs 7 crores in fine.

The Securities and Exchange Board of India (SEBI), in an order issued on August 27, found that the company's funds were diverted through conduit entities to unjustly enrich the company's promoters and their family members.

The order stated, "Such diversion of funds has resulted in loss to investors or shareholders of RSL".

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A fine of Rs 63 crore was slapped by SEBI on the promoters and associates of the company too, which included promoter and managing director Inder Pratap Singh Rana's fine of Rs 9 crore, promoter and chairman Ranjit Singh Rana's fine of Rs 5 crore, and promoter and director Veer Pratap Singh Rana's fine of Rs 5 crore.

The market regulator had begun investigating the company to see if funds had been diverted to benefit promoters and promoter-related entities, and if the financial statements of the company were misstated. Sebi's officials covered the period between FY15 and FY21 for the investigation, though references to events outside the period were made where necessary.

Based on the investigations, a showcause notice dated August 10, 2023, was issued to 15 noticees, which included the company, its promoters and associates. The allegation in the notice was that RSL transferred funds to Flawless Traders, Century Agros, Jay Aar Builders, RJ Texfab and RGS Traders which were private limited companies and which acted as conduit entities, who then passed on the funds the same day to Inder Pratap Singh Rana, Ranjit Singh Rana, Veer Pratap Singh Rana, Gurjeet Singh Rana, Karan Pratap Singh Rana, Rajbans Kaur, Preet Inder Singh Rana and Sukhjinder Kaur.

(This is a developing story. Please check back for more)