Kalyani Investment Company Settles Disclosure Norms Case with SEBI for ₹1.12 Crore

Kalyani Investment Company Limited (KICL), a promoter group entity of Bharat Forge and part of the $2.5 billion Kalyani Group has settled a case with the Securities and Exchange Board of India (SEBI) involving alleged violations of disclosure norms. The company agreed to pay a settlement fee of ₹1.12 crore to resolve adjudication proceedings initiated by the regulator.

The settlement was concluded under SEBI’s regulations, allowing entities to settle cases without admitting or denying the alleged violations. In a settlement order issued on Friday, SEBI’s adjudicating officer, Amit Kapoor, stated “In view of the acceptance of the settlement terms and the receipt of the settlement amount, the adjudication proceedings initiated against the applicant (Kalyani Investment Company) vide show cause notice (SCN) dated March 19, 2024, is disposed of.”

On December 24, 2024, Kalyani Investment share price plunged 1.46%, trading at ₹5,904 on the Bombay Stock Exchange (BSE) at 10:35 AM IST. According to BSE data, the stock recorded a total traded volume of 84 shares, with a turnover of ₹5.02 lakh.

Settlement Application and Approval

Following SEBI’s notice, KICL submitted a settlement application proposing revised terms to resolve the matter. These terms included the payment of ₹1.12 crore as settlement charges. SEBI’s High Powered Advisory Committee (HPAC) reviewed the proposal and recommended settling the matter.

With the acceptance of the settlement amount, SEBI concluded the adjudication proceedings against KICL, providing closure to the case.

Background of the Case

The proceedings against KICL stemmed from alleged violations of the Securities Contracts (Regulation) Act (SCRA) rules and disclosure norms. SEBI’s show cause notice, issued on March 19, 2024, highlighted several compliance lapses in transactions and governance practices.

Key issues raised included:

• Lapse in Related-Party Transactions: KICL failed to present the summary of a related-party transaction with Kalyani Steels Ltd (KSL) before its audit committee on March 27, 2014. This transaction involved the purchase of Non-Cumulative Optionally Convertible Preference Shares (NCOCPS) of Lord Ganesha Minerals Pvt Ltd (LGMPL).
• Absence of Audit Committee Approval: The company did not obtain prior approval from its audit committee for another related-party transaction with KSL dated September 16, 2015, which also involved the purchase of NCOCPS of LGMPL.
• Inter-Corporate Deposit Oversight: KICL allegedly failed to present a summary of inter-corporate deposits advanced to KSL between December 27, 2013, and March 19, 2014, to its audit committee.

Significance of the Settlement

The case resolution underscores the critical importance of compliance with disclosure and governance norms for listed entities. SEBI’s settlement mechanism enables companies to address regulatory concerns while avoiding prolonged litigation, without admitting guilt or liability.

For Kalyani Investment Company, this settlement is a significant step in resolving allegations that could have broader implications for corporate governance within the Kalyani Group, a leading $2.5 billion conglomerate.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.