SEBI Settles Case with Kalyani Steel, BF Utilities and More for ₹4.12 Crore

The Securities and Exchange Board of India (SEBI) has settled adjudication proceedings against Kalyani Steels, BF Utilities, and the former compliance officer of Kalyani Steels over alleged lapses relating to related-party transactions (RPTs). As per the settlement order, the regulator accepted a total payment of ₹4.12 crore from the three entities, effectively closing its investigation covering the period from FY10 to FY22.

Breakdown of Settlement Amount

• Kalyani Steels paid the largest share of the settlement at ₹2.8 crore.
• BF Utilities paid ₹36.28 lakh.
• Former Company Secretary and Compliance Officer Deepti R. Puranik paid ₹95.55 lakh as part of the settlement.

NSE Report Triggered Investigation

The case originated from an examination report submitted by the National Stock Exchange in March 2023. The report flagged investments made by Kalyani group companies in promoter-linked entities that had weak financial positions, including nil operations and negative net worth.

Several of these investments were impaired within a short period, raising red flags about fund utilisation practices and corporate governance standards within the group.

Findings on Approval and Disclosure Lapses

SEBI’s investigation found that Kalyani Steels had entered into multiple related-party transactions, including investments in preference shares, debentures, equity purchases, and trade advances, without obtaining mandatory prior approvals from its audit committee or shareholders, as required under listing regulations.

The regulator also observed failures in placing summaries of related-party transactions before the audit committee and lapses in quarterly disclosure requirements.

Also Read: SEBI Begins Comprehensive Review of PMS Regulations, Consultation Paper Expected in June

Accountability of BF Utilities and Compliance Officer

Similar approval and disclosure shortcomings were identified in BF Utilities’ transactions with Kalyani Steels. SEBI additionally held the then compliance officer responsible for failing to ensure adherence to regulatory requirements, citing violations of governance and disclosure obligations under the Listing Obligations and Disclosure Requirements (LODR) Regulations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.