SEBI Imposes Rs. 5 Lakh on Videocon's Venugopal Dhoot for Disclosure Lapses

SEBI Imposes Rs. 5 Lakh on Videocon's Venugopal Dhoot for Disclosure Lapses

The Securities Exchange of Board of India (SEBI) has levied Rs. 5 lakh fine on Videocon Group Founder Venugopal Dhoot (Noticee) for not making disclosures about his interest in Supreme Energy as well as for not disclosing that Quality Techno Advisors Pvt Ltd (QTAPL) and Credential Finance Ltd (CFL) were related parties with respect to certain transactions.

Videocon Group founded and promoted by Dhoot was holding 12.08 lakh or 24.7 percent stake in CFL in 2000 and in 2014 Videocon Group was holding 6.84 lakh shares in CFL. However, from the annual report of the company, it was noted that there was no mention of CFL as a related party in the annual reports available with Sebi from FY 2009-10 till FY 2014-15 as a related party, Sebi said.

Examination was conducted by SEBI regarding various news items appearing in the media since March 2018 regarding certain ‘quid pro quo’ arrangements between the Noticee and then ICICI Banks’ MD and CEO Ms. Chanda Kochhar, in lieu of grant of certain credit facilities by ICICI Bank to some entities belonging to the Videocon group.

The scope of the aforesaid examination was specifically to ascertain whether Noticee had violated the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “LODR Regulations”) and/or the provisions of the Equity Listing Agreement, in respect of the submissions/ disclosures that were required to be made by Videocon Industries Ltd. (hereinafter referred to as “the company”) to the stock exchanges.

The company in its submissions dated 18 November 21019, made to SEBI, had stated that the Noticee did not disclose his interest (99.9% shares) in Supreme Energy Private Limited (SEPL) to the company, at the time of grant of loan by the company to SEPL, which was in violation of the provisions of Code of Conduct of the Company and by not disclosing his interest in SEPL at the time of grant of loan by the company to SEPL, Noticee has prima facie violated the provisions of Clause 49(l)(D)(i) and Clause 49(l)(D)(ii) of the Equity Listing Agreement read with the Code of Conduct of the Company.

The Show Cause Notice (SCN) issued by SEBI alleged that the Noticee had not disclosed his interest in SEPL to the company, at the time of grant of loan by the company to SEPL.

Noticee submitted that he accidently had omitted to disclose to the company regarding his shares in SEPL.

In its order, SEBI found that Dhoot did not disclose his interest (99.9 per cent shares) in Supreme Energy Pvt Ltd (SEPL) to Videocon Industries, at the time of grant of loan by the company to SEPL. By not disclosing his interest in SEPL, Dhoot violated listing agreement, according to an order by SEBI.

In addition, the SEBI also noted that Dhoot did not disclose his interest in CFL and QTAPL.

With respect to Dhoot not disclosing QTAPL as its related party, SEBI on pursual of records found that QTAPL was incorporated in December 2008 and Kavishwar Patil and Vilas Salunkhe were appointed as its directors. Moreover, the same individuals were also directors in the subsidiary companies of Videocon Group.

The Chief General Manager and Adjudicating Officer expressed that, “related party disclosures are important to ensure proper review, approval, ratification of transactions between the Group and its related parties. Non –disclosure of the same can pose significant risk to the company and may not be in the best interest of the company and its shareholders. It can lead to situations in which business opportunity is lost, or funds are tunneled out of the company into another entity. Therefore, the related party disclosures are very important to health of the company.”

The Board discerned that as QTAPL was owned by Videocon Group companies -- Tek-care India Limited and Evans Fraser and Co (I) Limited -- before its acquisition by family trust of Deepak Kochhar. Therefore, Dhoot was under the obligation to disclose QTAPL as a related party, stated the Board.

In view of the same, the SEBI ruled that by not making required disclosures, Dhoot violated provisions of listing agreement and SEBI LODR (Listing Obligations and Disclosure Requirement), 2015 and hence, imposed a penalty of Rs. 5 lakh on the Noticee.