Lloyds Enterprises, 2 Others Settle Disclosure Lapses Case With Sebi for Over Rs 4 Cr

New Delhi: Lloyds Enterprises and two top executives on Tuesday settled with markets regulator Sebi a case related to alleged fraudulent activities and disclosure lapses after paying a total of Rs 4.16 crore towards settlement charges.

The settlement amount comprises Rs 1.28 crore paid by Lloyds Enterprises, and Rs 1.44 crore each by its promoter and executive director Rajesh Rajnarayan Gupta and Chief Financial Officer Viresh Shankar Sohoni, according to the Sebi order.

The proceedings stemmed from an investigation launched after Sebi received an alert from BSE in November 2023 regarding irregularities in advances reported by the company.

According to the order, Sebi’s investigation found that Lloyds Enterprises did not recognise the expected credit losses on advances of Rs 144.82 crore outstanding from Cheerful Trade & Realty Developers Pvt Ltd and Triumph Trade & Properties Developers Pvt Ltd during FY2016-17 to FY2020-21.

The regulator said the advances were consequently overstated in the company’s financial statements.

The Securities and Exchange Board of India (Sebi) further observed that the listed company had transferred Rs 144.82 crore to the two entities in FY 2006-07 at nil rate of interest and without any agreement, for the benefit of the promoters and their related entities.

The funds were allegedly misutilised from FY 2006-07 to FY 2022-23, the order said.

The markets watchdog also found that the two entities were related parties of Lloyds Enterprises but were not disclosed in its annual reports for the period from FY 2016-17 to FY 2022-23.

Gupta was the Managing Director during the relevant period, according to the order.

Sebi also noted that in lieu of the advances of Rs 144.82 crore given to the two entities in FY 2006-07, Lloyds Enterprises received a 7 per cent partnership interest in Lloyds Metals & Minerals Trading LLP in FY 2023-24, whose total net worth was Rs 5,852.64 crore in FY 2023-24.

Thereafter, the applicants filed a suo-motu settlement applications with Sebi, proposing to settle, by neither ‘admitting nor denying the findings of facts and conclusions of law’.

The revised settlement terms were approved by Sebi’s panel of Whole Time Members in July this year. Subsequently, the applicants remitted the settlement amount, which was confirmed by the regulator.

“…it is hereby ordered that any proceedings that may be initiated for the violations are settled in respect of the applicants,” Sebi’s Whole Time Members Sandip Pradhan and K V R Murthy said in the order.

However, Sebi retains the right to take further action if any misrepresentation is discovered or if the company breaches any terms of the settlement.

(Disclaimer: Except for the headline, this article has not been edited by HDFC Sky editorial team and is auto-generated from PTI feed.)