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Informist, Wednesday, Dec. 11, 2024

 

MUMBAI – The Securities and Exchange Board of India rejected some responses filed by Sunil Kalot, the promoter of Debock Industries Ltd., in a matter related to financial fraud. In an order, SEBI's Whole Time Director Aswani Bhatia said that he cannot accept Kalot's argument that he did not participate in the company's preferential allotment and rights share issue.

 

An amount of INR 3 million received by the company from another promoter Priyanka Sharma was repeatedly circulated between Debock Industries, Kalot, and the allottees. Hence, Kalot's argument that he lent money for purchasing shares "is contrary to the facts on record and, therefore, cannot be accepted," Bhatia said in the order. SEBI also rejected the promoter's claim that the cost of acquisition of shares allotted to Kalot was not taken into consideration.

 

On Aug. 23, the market regulator had issued an interim order against Debock Industries, its Chairman Mukesh Manveer Singh, and two other promoters--Kalot and Sharma--for financial fraud. This included manipulation of financial statements, submission of false bank statements, migration to the main board of the stock exchange from the innovators growth platform through fictitious preferential issues, and siphoning off the rights share issue proceeds, SEBI had then said.

 

The market regulator had also said that the very purpose behind listing the company was to defraud investors and make huge gains for personal benefit. The preferential allotment was used to justify the company's migration to the main board and is nothing more than a "hollow pretence", SEBI had said. The proceeds of the rights share issue by the company immediately after its debut on the exchange were also siphoned off by the promoters and their associates. There was a jump in the company's financial performance after shifting to the main board, which SEBI called "fictitious" and said many of the book entries were conjured up to inflate its balance sheet.

 

The stock was listed on the National Stock Exchange in June 2018 at INR 10.47 and has fallen 64% since. It closed 2.1% lower at INR 3.76 on Wednesday.

 

The INR 892.44 million gained by promoters from these fraudulent activities were impounded, as per the order. The regulator had also restrained these three promoters from buying, selling or dealing in securities, or accessing the capital market either directly or indirectly, in any manner.

 

SEBI had asked to impound INR 375.78 million gained by Singh and INR 376.66 million gained by Kalot through the preferential allotment of shares. However, Singh said he had not participated in the preferential allotment and that he was allotted 1.05 million shares in two tranches at an average cost of INR 5.02 per share instead of INR 5.46 per share estimated by SEBI.

 

Bhatia also said that Singh did not submit any evidence as claimed by him that he had transferred 4.75 million shares to Naturo IndiaBull Ltd.'s Managing Director Gaurav Jain as gifts, and Singh did not get any consideration for it. Jain appeared to have received INR 250.7 million from the proceeds of rights share issue undertaken by Debock Industries and his role is under investigation, Bhatia said. 

 

"I hereby confirm the directions issued vide the interim order dated August 23, 2024, without any modifications," Bhatia said in the order.  End

 

Reported by Anjana Therese Antony

Edited by Ashish Shirke

 

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