Sebi questions Raymond over real estate deals

Mumbai: The Securities and Exchange Board of India (Sebi) has written to Raymond Ltd questioning the textile maker’s real estate agreements for JK House Ltd and a property at Alibaug used as a guest house, said three people with direct knowledge.

The regulator has also questioned whether the firm made any related-party transactions that were not reported to shareholders after Sebi’s Listing Obligation and Disclosure Requirements (LODR) norms came into force in September 2015, these people said.

“This is the same old issue that is being referred to more than a month ago where we stated that Sebi had sought certain clarifications which have been duly addressed and we are compliant with all regulations. Since there is no new development in this context and the matter is old and already reported, this query from Mint does not merit any response,” said a spokesperson for Raymond in an emailed response.

An email sent to Sebi on Friday was not answered.

The markets regulator had first sent some queries about JK House, a 13 June Moneycontrolreport said. Subsequently, the regulator had again written to Raymond in August, one of the people cited earlier said.

In its first letter to Raymond, Sebi asked for the agreement involving JK House, where members of the promoter family are involved in a legal battle over the thwarted sale of four redeveloped flats. According to a 2007 agreement, these flats were to be sold to Singhania family members. Raymond shareholders rejected this proposal after the firm’s board put it for approval earlier this year after proxy firms pointed out that the sale price was at a deep discount to current market rates.

Subsequently, former Raymond chairman Vijaypat Singhania and his cousins Akshaypat and Anant Singhania, approached the Bombay high court against Raymond and Pashmina. An arbitration is underway.

The second Sebi letter questions transactions related to the Alibaug property, its lease deed, rental agreement between the company and its subsidiaries—Pashmina Holdings and Avani Agricultural Farms Pvt. Ltd.

The agreement was to use the Alibaug house as a guest house. Originally, the property was with Pashmina Holdings; later it was sold to Avani Agricultural. In 2013, the property was let out to Silver Apparel Ltd, another wholly owned subsidiary, Raymond said in its response to Sebi queries. A copy of its reply has been reviewed by Mint.

“Raymond’s expense towards Alibaug house on the company’s books could be in violation of Sebi listing regulations and norms towards related party transactions. The multi-layered agreement and details were not shared with shareholders,” said the person cited earlier.

“Appropriate disclosures...have been made in the Annual Reports of the Company from time to time,” said Raymond’s response. “Further, we submit that the Company has not entered into any material related party transactions since the coming into effect of the Listing Regulations.”

Raymond’s response did not say whether this transaction was shared with shareholders.

“Sebi is examining the responses. In addition, Sebi has also taken information from stock exchanges pertaining to Raymond—this includes its financial numbers, corporate announcements and Raymond’s shareholding pattern for the past five years,” said another person from the three cited earlier.

“Everyone is questioning the rental agreements, however this is a subject of market conditions. Any property of a listed company belongs to shareholders and not to any specific class of shareholders,” said J.N. Gupta, co-founder and managing director of Stakeholder Empowerment Services, a proxy advisory firm.