Markets regulator Securities and Exchange Board of India (SEBI) has debarred 14 entities including, Rana Sugars promoters’ and other related entities from the securities markets for two years and slapped a ₹63-crore fine on them on charges of diversion of funds.
The regulator also prohibited Inder Pratap Singh Rana (promoter), Ranjit Singh Rana (chairman), Veer Pratap Singh Rana (MD), Gurjeet Singh Rana, Karan Pratap Singh Rana, Rajbans Kaur, Preet Inder Singh Rana and Sukhjinder Kaur (promoter) from holding any position as director or key managerial person of any other listed company for two years.
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Ranjit Singh, Veer Pratap and Sukhjinder Kaur were also the promoters of Rana Sugars Limited, as per the exchange data.
Individually, SEBI imposed penalties in the range of ₹3 crore to 7 crore on Rana Sugars, its promoters, and other related entities.
“I find that noticee No 1 to 9, who are promoters of RSL and beneficiaries of such diversion of funds from RSL, have violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.”
“…also find that Noticee No 10 (Manoj Gupta), who was CFO and signed and certified such manipulated financial statements of RSL, aided and abetted such diversion of funds from RSL to its promoters and their family members violated PFUTP regulations,” SEBI’s Chief General Manager G. Ramar said in the final order on Tuesday (August 27, 2024.)
The probe revealed that Rana Sugars Limited failed to disclose Laxmiji Sugars Mills Company as a related party in FY 2016-17. Further, the firm failed to disclose FTPL, CAPL, JABPL, RJPL and RGSPL as related parties.
Inder Pratap, Ranjit, Veer Pratap Singh Rana, were persons in charge of and responsible for the affairs of Rana Sugars. Therefore, Rana Sugars, Inder Pratap, Ranjit Singh and Veer Pratap Singh Rana have violated the disclosure rules.
SEBI also noted with respect to the movement of funds between RSL and its related entities was not towards business advance for the purchase of sugar cane seeds and repayment of unsecured loan.
Related parties are Flawless Traders Private Limited (FTPL), Century Agros Private Limited (CAPL), Jay Aar Builders Private Limited (JABPL), RJ Texfab Private Limited (RJPL) and RGS Traders (RGSPL).
“These funds were then transferred by RSL to related parties on the same day to promoters of Rana Sugars and their family members. The regulator found that related parties aided and abetted Rana Sugars, its promoters and directors to divert funds from RSL and violated PFUTP norms,” the order said.
SEBI also directed Rana Sugars to recover ₹607 crore from related entities which includes ₹339 crore in receivables and ₹268 crore in interest dues.
Thereafter, the regulator directed Rana Sugars to take all necessary steps for recovery of dues from these entities and advised them to appoint an independent law firm to take effective steps for recovery in consultation with the NSE.
The markets watchdog also observed that RSL, Inder Pratap Singh Rana, Ranjit Singh, Veer Pratap Singh, Gurjeet Singh, Karan Pratap Singh and Rajbans Kaur have failed to provide any explanation for not appearing before the investigation authority (IA).
Further, they also failed to furnish information/documents sought by the IA, which hampered the investigation process, thereby, violating SEBI norms.
The order came after SEBI investigated the affairs of RSL to examine the diversion of funds from the company by the promoters and promoter-related entities of Rana Sugars, and consequent misstatements in the financial statements of the company.
And whether the alleged diverted funds have been siphoned off by the promoters and promoter-related entities of the firm, resulting in violations of the provisions of PFUTP rules and LODR (Listing Obligations and Disclosure Requirements) norms. The investigation period was from financial year (FY) 2014-15 to FY 2020-21.