SEBI has now given this strict punishment: This company and its promoters cheated the investors

Cheating investors proved costly for Debock Industries Limited and its promoter. Market regulator SEBI took a major action on Friday and banned Rajasthan-based Debock Industries Limited and its promoter and CMD Mukesh Manveer Singh from the capital market on charges of deceiving investors. SEBI found that the promoters are involved in misappropriation of funds from the company. According to PTI news, apart from this, Debock Industries (DIL) promoter Sunil Kalot and Mukesh Manveer Singh's wife Priyanka Sharma have also been banned from the securities market.

Illegal income of Rs 89.24 crore seized

According to the news, the regulator has seized a total illegal income of Rs 89.24 crore earned from alleged fraudulent activities done by these three persons. Apart from this, the regulator has also imposed several restrictions on them. Debock Industries, listed on the National Stock Exchange (NSE), is mainly engaged in the business of agricultural equipment, hospitality services and mining. The company was initially listed on the Innovators Growth Platform on June 5, 2018. Subsequently, it moved to the main board of NSE on March 31, 2022.

Promoter engaged in misappropriation of funds from company

In its order, Sebi said that the actions of the company, prima facie, reveal a brazen and well-planned attempt to defraud investors and deceive the regulatory authorities. Also, the regulator noted that the promoters are involved in misappropriation of funds from the company. In fact, it also appears that the motive behind listing this company was to defraud investors and make huge profits for personal gain. The preferential allotment, which was used to justify the shifting of the company to the main board, is nothing but a hollow sham.

Shares quietly shifted off-market to promoters

Sebi said in its interim order that once allotted, the shares were quietly shifted off-market to the promoters who then sold them to unsuspecting shareholders. Promoter shareholding declined from 64. 79 per cent to 9. 41 per cent during FY21 to FY24, while public shareholding increased from 35. 21 per cent to 90. 56 per cent. As on March 31, 2021, the company had just 171 public shareholders, while as on March 31, 2024, it had 53,389 shareholders. SEBI revealed that when the company moved to the main board of NSE, it issued a rights issue in which the promoters did not participate and the entire proceeds from the rights issue, the funds which should have been used for legitimate business purposes, were siphoned off by the promoters and their associates.

The company did not receive the proceeds of this issue

After this rights issue, another preferential allotment took place. Further, it appears that the company has not received the proceeds of this issue either. SEBI said that therefore, this pattern can be repeated, where the company was bringing several consecutive issues, which should have raised a total of about Rs 162 crore, but at this time it seems that all this has disappeared. The biggest thing is that most of the sales and purchases of the company are fictitious. Many of these transactions were mere book entries, which were made to inflate the balance sheet. SEBI whole-time member Ashwini Bhatia said that the financial position of the company, I am forced to say that it is a fictional creation.

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