Sebi queries Raymond on JK House property sale
Markets regulator Sebi has sent a letter to fashion retailer Raymond and its board of directors, asking for clarifications about non-disclosure of a pact under which the company had agreed to transfer a high-value real estate property in south Mumbai to members of its promoter family at a throwaway price. Shareholders and proxy advisory firms alleged that the agreement, if executed, could lead to huge losses to the company, but Raymond refuted the same.
Although Raymond, members of its promoter family (Singhanias) and Pashmina Holdings, an investment company of the Singhania family, had entered into this agreement in 2007, it was kept under wraps for about 10 years and disclosed to shareholders only recently. On June 5, Raymond’s minority shareholders rejected a company resolution to transfer the duplex flats to the signatories to the agreement.
Under the 2007 agreement, Raymond CMD Gautam Singhania, Vijaypat (Gautam’s father), Akshaypat (Gautam’s cousin) and Veena Devi (Vijaypat’s brother’s wife) will get one flat each in the redeveloped 5,185-sq-ft J K House of at a price of Rs 9,200 per sq ft. Compared to this, the going market rate in that area of the city could be upwards of Rs 1.2 lakh per sq ft.
Starting March this year, a minority shareholder of Raymond had written several letters to Sebi pointing out issues related to corporate governance. If the agreement is executed, the company and non-promoting shareholders will lose a large amount of money, the letter had pointed out. Sebi now wants to know why the information relating to the agreement was not disclosed to Raymond shareholders soon after it was signed. Under Sebi rules, every price-sensitive information should be disclosed to the exchanges. This is the second letter that Sebi has sent to Raymond in the last three months, mainly acting on the letter by the minority shareholder, sources said. The first one was sent in March.
A Raymond spokesperson said that Sebi had sought certain clarifications which have been duly addressed. “We are compliant with all regulations,” the spokesperson said.
A company source said that Raymond had received one letter from Sebi in March which was replied appropriately. It has recently received another letter from the regulator, which related to complaints about lack of corporate governance, especially the tripartite agreement about the flats in J K House.