The markets regulator has ordered Binny to bring back over ₹700 crore of diverted funds into its accounts and imposed a penalty of ₹27.5 crore on the company and some of its key executives.
Sebi has also barred some top executives from accessing the securities market for three years.
Neha Joshi
Published2 Aug 2024, 07:47 PM IST
Sebi pulled up Binny Ltd’s top management for diversion of funds that allegedly took place over three months in 2014-15.
The Securities and Exchange Board of India has directed textile maker Binny Ltd to bring back over ₹700 crore of diverted funds into its accounts and imposed a penalty of ₹27.5 crore on the company and some of its key executives for repeated violations.
The regulator also barred Binny’s executive chairman M. Nandagopal, managing director Arvind Nandagopal, and chief financial officer T. Krishnamurthy from accessing the securities market and or being associated with any listed company or intermediary in any capacity for three years.
Sebi executive director Babitha Rayudu in a 31 July order said the regulator had established that ₹712 crore had been diverted from Binny as advances to related parties. The amount remains outstanding even after more than 10 years, indicating the repetitive nature of the violations, Rayudu said in the order.
Sebi has instructed Binny to bring back the diverted amount into the company’s books along with an interest of 12% per annum from the date of such transactions, which allegedly took place over three months in 2014-15.
It also barred former Binny director Nate Nandha from accessing the market or being associated with any listed company.
Diversions and misstatements
Sebi began an investigation into Binny’s accounts after receiving several complaints of siphoning or diversion of the company’s funds, misstatements in its financial statements, and unauthorised related party transactions.
One allegation was that advances of ₹329.29 crore were given to vendors involved in business activities not related to the company.
Another allegation was that ₹383.35 crore had been diverted to Mohan Breweries and Distilleries Ltd, a related party of Binny, for the purchase of land parcels and a windmill farm.