Description

SEBI order pursuant to Bombay High Court directions concerning Bajaj Hindusthan Sugar Limited, its promoters Shishir Bajaj and Kushagra Bajaj, involving alleged diversion of over ₹1,189 crore and non-disclosure of related party transactions.

Summary

SEBI has issued an order in compliance with the Bombay High Court’s direction (W.P. No. 3409 of 2024) in the matter of Bajaj Hindusthan Sugar Limited (BHSL). The order covers three noticees: Bajaj Hindusthan Sugar Limited, its promoter Shishir Bajaj, and Kushagra Bajaj. SEBI’s investigation (covering FY 2010-11 to FY 2021-22) found prima facie evidence of large-scale fund diversion and systematic non-disclosure of related party transactions (RPTs), in violation of SEBI Act, SCRA, PFUTP Regulations, and LODR Regulations.

Key Points

  • Noticees: Bajaj Hindusthan Sugar Limited (PAN: AAACB4351J), Shishir Bajaj (PAN: ACJPB6303J), and Kushagra Bajaj (PAN: ABBPB5704G)
  • Investigation Period: FY 2010-11 to FY 2021-22
  • Total Alleged Diversion: Over ₹1,189 crore across two channels (OIPL and BPGPL)
  • BHSL is a sugar and ethanol manufacturer with 14 plants in Uttar Pradesh, listed on BSE and NSE
  • SCN was issued on October 16, 2023; initial response received December 06, 2023
  • Noticees filed separate settlement applications under SEBI (Settlement Proceedings) Regulations, 2018 on December 13, 2023
  • Proceedings are being conducted pursuant to an order of the High Court of Judicature at Bombay

Regulatory Changes

No new regulatory changes are introduced. This order enforces existing provisions under:

  • SEBI Act, 1992 (Sections 11(1), 11(4), 11(4A), 11B, 15HA, 15HB)
  • Securities Contracts (Regulation) Act, 1956 (Section 12A(2) read with Section 23H)
  • SEBI (PFUTP) Regulations, 2003
  • SEBI (LODR) Regulations, 2015
  • SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • The noticees were required to respond to the Show Cause Notice issued October 16, 2023
  • Noticees have filed settlement applications under the SEBI (Settlement Proceedings) Regulations, 2018
  • Companies must ensure proper disclosure of all related party transactions in annual reports as mandated by LODR Regulations
  • Loans and fund transfers to related/associated entities must be disclosed and classified appropriately as RPTs

Important Dates

  • Investigation Period: FY 2010-11 to FY 2021-22
  • Fund Transfer via OIPL: December 31, 2013 to August 01, 2014
  • Fund Transfer via BPGPL: November 28, 2011 to October 21, 2014
  • SCN Issued: October 16, 2023
  • Initial Response Received: December 06, 2023
  • Settlement Applications Filed: December 13, 2023
  • Order Date: May 2026 (per Bombay High Court W.P. No. 3409 of 2024)

Impact Assessment

Market Impact: High. This enforcement action concerns a BSE and NSE listed company (BAJAJHIND) and its top promoters, involving allegations of diverting over ₹1,189 crore over multiple years. The outcome of settlement proceedings or penalty orders could materially affect shareholder confidence and the stock’s market standing.

Investor Impact: Shareholders of Bajaj Hindusthan Sugar Limited are directly affected. The alleged non-disclosure of RPTs since 2014 means investors may have made decisions based on materially misleading financial statements over an extended period.

Regulatory Precedent: The case reinforces SEBI’s scrutiny of related party transactions and fund diversion through intermediary entities to circumvent disclosure obligations. It underscores the obligation of listed companies to accurately classify and disclose RPTs and the liability of key managerial personnel and promoters for such violations.

Impact Justification

Involves alleged diversion of over ₹1,189 crore (₹318.50 crore via OIPL and ₹870.60 crore via BPGPL) by a listed company and its key promoters, with violations spanning over a decade and proceedings initiated in compliance with a Bombay High Court order.