Zuari Agro Chemicals, four officials settle case with Sebi

New Delhi, Mar 5 (PTI) Zuari Agro Chemicals Ltd (ZACL) on Thursday settled allegations of misrepresenting the company's financial statements with the capital markets regulator Sebi after paying Rs 1.2 crore as settlement amount.

In addition, the company agreed to a voluntary debarment from buying, selling or trading in the securities market for a period of three months as a part of the settlement terms, Sebi said in its order.

Also, four individuals who were holding senior positions at the time of alleged violations settled the matter with the Securities and Exchange Board of India (Sebi) after collectively paying Rs 1.7 crore.

Sunil Sethy, who was Managing Director of the company, and R K Gupta, who was Chief Financial Officer (CFO), remitted Rs 73.12 lakh each and also agreed to a four-month voluntary debarment from the securities market.

Also, Nitin Manguesh Kantak, whole-time director, and Vijayamahantesh Khannur, company secretary, each paid Rs 12.67 lakh as part of the settlement. They were holding these positions at the time of the violations.

After receipt of the settlement amount by Sebi, the adjudication proceedings initiated against the applicants vide SCN (show cause notice) dated January 14, 2025 is disposed of in terms of the Settlement Regulations, the order noted.

In its show cause notice, Sebi alleged that Zuari Agro Chemicals misrepresented its financial statements for FY2019-20 by under-reporting losses and incorrectly recording impairment of investments.

Sebi also alleged that the company transferred certain businesses to its wholly-owned subsidiary through a slump sale that generated an exceptional gain, which was considered a device to conceal its actual financial position.

Further, the company was accused of entering into material related-party transactions worth Rs 811.33 crore with Paradeep Phosphate Ltd without obtaining prior approval from the audit committee and shareholders.

The regulator also alleged that the Managing Director, CFO, whole-time director and company secretary were responsible for failing to discharge their duties, which resulted in misstatements in financial disclosures and failure to obtain necessary approvals for related party transactions.

While adjudication proceedings were pending, the applicants proposed to settle the instant proceedings initiated against them, "without admitting or denying the facts and conclusions of law," through a settlement order and filed a settlement application with Sebi on March 7, 2025.

Following discussions with Sebi's internal committee and consideration by the High Powered Advisory Committee (HPAC), the settlement terms were recommended and later approved by the panel of Sebi's whole-time members on February 2, 2026.

After the applicants remitted the settlement amounts, Sebi disposed of the adjudication proceedings through a settlement order. PTI SP DRR