SEBI Bars Rana Sugars And Top Promoters For 2 Years, Imposes ₹63 Crore Fine For Fund Diversion And Fraudulent Activities

Rana Sugars Limited, a major player in the sugar industry, was found to have engaged in the diversion of funds to benefit its promoters and related parties.

The key individuals implicated include Inder Pratap Singh Rana, the Managing Director, Ranjit Singh Rana, the Chairman, and other prominent members of the Rana family, who collectively hold significant control over the company's operations. These individuals, along with the company, were found to have violated multiple regulations, including the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and the Listing Obligations and Disclosure Requirements (LODR) Regulations.

The investigation by SEBI uncovered a complex web of financial transactions that facilitated the diversion of funds from Rana Sugars to its promoters and their family members. These funds, which amounted to a substantial ₹607 crore, were routed through various related entities including Flawless Traders Pvt Ltd, Century Agros Pvt Ltd, and others.

The order stated that these transactions were not for legitimate business purposes, such as the purchase of sugarcane seeds or repayment of unsecured loans as claimed by the company. Instead, they were part of a scheme to siphon off funds for the benefit of the promoters.

The Chief General Manager of SEBI, G Ramar, in the final order, noted that the financial statements of Rana Sugars were manipulated to conceal these fraudulent activities. The company's Chief Financial Officer, Manoj Gupta, played a major role in certifying these manipulated financial statements, thereby aiding and abetting the diversion of funds. This manipulation resulted in significant violations of PFUTP regulations and SEBI has imposed severe penalties on all parties involved.

In addition to the financial penalties, SEBI has also directed Rana Sugars to recover the diverted funds from the related entities. To ensure effective recovery, the company has been ordered to appoint an independent law firm, in consultation with the National Stock Exchange (NSE), to oversee the recovery process.

The regulatory body also noted the non-cooperation of the promoters and officials during the investigation process. They failed to provide necessary documents and did not appear before the investigating authority, which hindered the investigation.

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