Golden Tobacco Case: Market Regulator SEBI has given a new order against the promoters of bankrupt Golden Tobacco Limited (GTL). It has serious allegations on the company and its top officials like fund diversion ie misuse of funds and misunderstandings in financial details. SEBI took the decision on Friday after a thorough investigation by Golden Tobacco Limited.
Promoters ban and fine
SEBI has banned GTL promoter Sanjay Dalmiya from the Securities Market for two years. They have been fined ₹ 30 lakh. SEBI has stated in his order that Dalmia violated the Proustate of Fraudulant and Anfection Trade Practices (PFUTP) Regulation and Listing Obligations and Disclaimers Requirements (LODR) Regulations.
Similarly, Anurag Dalmia, director and promoter of Golden Tobacco Limited, has been instructed to stay away from the capital market for one and a half years. They have been fined ₹ 20 lakh. At the same time, former director Ashok Kumar Joshi has also been imposed a one -year ban and a fine of ₹ 10 lakh.
Why did SEBI take action?
According to SEBI order, between FY 2010 and 2015, GTL transferred its subsidiary Gril as ₹ 175.17 crore loan and advance. This amount was shown by the company outstanding in its annual reports. The investigation found that only ₹ 36 crore came back from this amount, while the remaining amount was diverted to other units connected to the promoters.
This means that the company showed in its reports that the money subsidiary is lying as a loan and is yet to come back. But in reality that money was not there, because a large part of it was withdrawn in other companies of promoters. GTL incorrectly diverted shareholders and public money, which SEBI considered a serious disturbance.
Large manipulation in land deal
SEBI investigation revealed that GTL promoters and directors made deals related to the company’s major land property without giving full knowledge to shareholders. These included agreements related to land sales or lease, which were not either in the interest of the company or they were not reported in a transparent manner in the stock exchange.
SEBI Authority comment
SEBI’s Quasi-Judicial Authority N. Murugan said in the order, “It is clear from the connection established between promoter units that he benefited from fund diversion.” However, he also added that GTL himself or promoter-linked units are not party in this action, so direct instructions cannot be given against them. Nevertheless, the order believed that the loss of damage caused by fund diversion was on the shareholders in an indirect manner.
History of Golden Tobacco Limited
Golden Tobacco Limited was once famous for cigarette brands such as Panama and Chancellor. However, it became more dependent on real estate over time, especially in Mumbai and Delhi. In 2022, the National Company Law Tribunal (NCLT), Ahmedabad declared the company bankrupt and ordered to start the Corporate Insolvency Resolution Process (CIRP).
SEBI has also passed the order in matters related to Sanjay Dalmia, Anurag Dalmia and others in October 2013 and February 2014 earlier.
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