Lloyds Enterprises and Key Executives Pay ₹4.16 Crore to Settle SEBI Investigation Over ₹144.82 Crore Fund Diversion

Capital markets regulator Securities and Exchange Board of India (SEBI) has disposed of proceedings against Lloyds Enterprises Limited and its former top management after the entities collectively paid ₹4.16 crore in settlement charges. The proceedings arose from an investigation into alleged accounting irregularities, non-disclosure of related-party dealings, and the diversion of company funds amounting to ₹144.82 crore.

The settlement was executed on a "neither admitting nor denying the findings of fact and conclusions of law" basis through a suo-motu settlement application filed under SEBI's Settlement Regulations.

Breakdown of Settlement Charges

Under the settlement terms cleared by the regulator, the total ₹4.16 crore penalty was split as follows:

• Lloyds Enterprises Limited: ₹1.28 crore
• Rajesh Rajnarayan Gupta (then Managing Director): ₹1.44 crore
• Viresh Shankar Sohoni (then Chief Financial Officer): ₹1.44 crore

The High-Powered Advisory Committee (HPAC) evaluated the settlement terms on May 27, 2026, and recommended acceptance, which was subsequently approved by a panel of SEBI Whole-Time Members—Sandip Pradhan and K V R Murthy—on July 15, 2026. SEBI confirmed receipt of the full payment in August 2026.

Genesis of the SEBI Investigation

The regulatory probe originated from an alert report submitted by BSE on November 21, 2023, pointing to potential discrepancies in advances listed in Lloyds Enterprises' financial books.

Following the alert, SEBI launched a comprehensive review of the company's financial statements covering multiple fiscal years and flagged critical violations:

Key Irregularities Identified by SEBI:

• Interest-Free Fund Outflows: In FY 2006-07, Lloyds Enterprises transferred ₹144.82 crore to two entities—Cheerful Trade & Realty Developers Pvt Ltd and Triumph Trade & Properties Developers Pvt Ltd—without executing formal loan agreements and at nil interest rates. SEBI noted that this arrangement directly benefited promoters and related entities while causing financial detriment to the listed entity over a span running from FY 2006-07 through FY 2022-23.
• Failure to Comply with Ind-AS 109: Lloyds Enterprises did not recognize expected credit losses (ECL) on the ₹144.82 crore advances outstanding from the two developer entities during the period between FY 2016-17 and FY 2020-21. Consequently, advances were substantially overstated on the balance sheet.
• Omission of Related-Party Disclosures: Both borrowing entities qualified as related parties under SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations. However, the company failed to classify and disclose them as related parties in its annual reports between FY 2016-17 and FY 2022-23.

Equity Restructuring and Regulatory Closure

According to the settlement order, in FY 2023-24, Lloyds Enterprises restructured the outstanding exposure by receiving a 7% partnership interest in Lloyds Metals & Minerals Trading LLP in lieu of the ₹144.82 crore in advances. The settlement filing highlighted that the LLP had a recorded net worth of ₹5,852.64 crore in FY 2023-24.

While SEBI ordered that no further enforcement action would be pursued against the company and the two executives regarding these specific alleged violations, the watchdog maintained that it retains the right to restore proceedings should any information submitted in the settlement petition later be found false or misleading.

Tags: Lloyds Enterprises SEBI BSE Corporate Governance Capital Markets