The Securities and Exchange Board of India (Sebi) has pulled up Vedanta Ltd for related party transactions worth Rs 1,407 crore in 2020-21 without the prior approval of its audit committee.

The market regulator shot off a two-page warning letter to the Anil Agarwal-led company. According to Sebi’s directions, Vedanta placed the letter before its board of directors on Friday and also informed the stock exchanges about the regulator’s rap.

Sebi said it would take action if it detected similar irregularities in future transactions.

“The aforesaid non-compliances are viewed seriously. You are hereby warned and advised to ensure compliance with all applicable provisions of Sebi Regulations. Any such aberration in future would be viewed seriously and appropriate action would be initiated,” Sebi said.

In the firm’s annual report for the year ended 2020-21, the independent auditor for the mining conglomerate had flagged the related-party transactions that were executed without prior approval of its audit committee.

“With regard to the qualified opinion in respect of the company executing related party transactions worth Rs 1,407 crore without prior approval of the audit committee, the company has submitted that the said transaction was ratified later (after a period of about 47 days),” Sebi said in the October 28 letter.

Without disclosing the nature of the transaction, the company said it was done at an arm’s length and in the ordinary course of business.

“In this regard, attention may be drawn to Regulation 23(2) of Sebi (LODR) Regulations, 2015, which states that all related party transactions shall require prior approval of the audit committee,’’ the market regulator said.

“Accordingly, the submission of the company that the transactions were done at an arm’s length distance is not tenable,” it added.

Regarding the auditor’s observation about the delay in the disclosure of the outcome of the board meeting held on October 3 last year, the company said the delay was due to unforeseen circumstances and it would ensure that this was not repeated.

Vedanta said in the filing that at a meeting held on October 29, the board of directors took note of the Sebi letter.

The board "has advised the company to ensure adherence to all applicable provisions," it said.

"We would also like to state that the company has always been meticulous in complying with all the provisions of the Companies Act and SEBI Regulations and will continue to do so," Vedanta said.

Shares of Vedanta ended with gains of almost 1 per cent at Rs 303.70 in the BSE on Friday.