What actions have been taken against Golden Tobacco Ltd promoters for financial misconduct?

New Delhi, Aug 30 (NationPress) In a recent ruling, the Securities and Exchange Board of India (SEBI) has taken action against Golden Tobacco Limited (GTL) and its promoters for serious infractions, including fund diversion, account misrepresentation, and disclosure breaches. This decision comes after an extensive investigation that revealed years of misuse of company resources and irregular financial dealings.

As a result of these violations of the Listing Obligations and Disclosure Requirements (LODR) Regulation and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulation, Sanjay Dalmia, a key promoter of GTL, has been suspended from participating in the securities market for two years and fined Rs 30 lakh.

Another promoter, Anurag Dalmia, who serves as a director, has been imposed with a penalty of Rs 20 lakh and banned for one and a half years.

Furthermore, Ashok Kumar Joshi, a former director, is required to pay a fine of Rs 10 lakh and faces a one-year ban from the capital market.

Between FY10 and FY15, GTL extended loans and advances amounting to Rs 175.17 crore to its subsidiary, Golden Real Estate Infrastructure Limited (GRIL). SEBI’s findings indicated that the majority of these funds were funneled to entities affiliated with the promoters, even though only Rs 36 crore was returned.

The investigation also highlighted that GTL’s leaders engaged in agreements concerning valuable land assets without appropriate disclosures to shareholders. Several contracts for land sales or leases with external parties were either disadvantageous for the company or lacked transparency with stock exchanges.

According to SEBI's Quasi-Judicial Authority, N. Murugan, the promoters gained from these illicit fund diversions. However, he noted that neither GTL nor its affiliated entities were directly involved in the current proceedings, and thus no explicit orders could be mandated against them.

It is important to acknowledge that the misappropriated funds indirectly affected shareholders, resulting in a notional loss.

Once renowned for its cigarette brands such as Chancellor and Panama, GTL has gradually shifted its focus towards real estate, amassing significant land assets in Delhi and Mumbai.

The National Company Law Tribunal (NCLT) in Ahmedabad initiated insolvency proceedings against the company in 2022 under the Corporate Insolvency Resolution Process (CIRP).

SEBI has previously taken action in this case, issuing adjudication orders against Sanjay and Anurag Dalmia back in October 2013 and against other individuals in February 2014.