Sebi Bans Debock Industries, Promoters for Defrauding Investors

New Delhi, Aug 23 (PTI) In a major crackdown, markets regulator Sebi on Friday barred Rajasthan-based Debock Industries Ltd and its promoter and CMD Mukesh Manveer Singh from the capital markets for defrauding investors.

The regulator noted that promoters have indulged in siphoning of funds from the company.

Apart from these, Sunil Kalot, a promoter of Debock Industries (DIL), and Priyanka Sharma, wife of Mukesh Manveer Singh, have also been prohibited from the securities market.

Additionally, the regulator has impounded total unlawful gains to the tune of Rs 89.24 crore earned from alleged fraudulent activities carried out by these three persons.

Also, the regulator has put several restrictions on them.

Listed on the NSE, Debock Industries is primarily engaged in trading agricultural equipment, hospitality services and mining.

The company was initially listed on the Innovators Growth Platform on June 5, 2018. Subsequently, it migrated to the main board of the NSE on March 31, 2022.

In its order, Sebi said, "The actions of the company, prima facie, reveal a brazen and calculated effort to defraud investors and deceive regulatory authorities".

Also, the regulator noted that promoters have indulged in siphoning of funds from the company. In fact, it also appears that the very purpose behind listing this company was to defraud investors and make huge gains for personal benefit.

The preferential allotment, which was used to justify the company's migration to the main board, stands "exposed as nothing more than a hollow pretence".

"Once allotted, the shares were quietly transferred off-market to the promoters, who then offloaded them onto unsuspecting shareholders," Sebi said in its interim order.

During FY21 to FY24, the promoter shareholding came down from 64.79 per cent to 9.41 per cent, whereas the public shareholding went up from 35.21 per cent to 90.56 per cent. The company, which only had 171 public shareholders as of March 31, 2021, had 53,389 shareholders by March 31, 2024.

"Once the company migrated to the main board of the NSE, it came out with a rights issue where the promoters did not participate and the entire proceeds from the rights issue 'funds that should have been used for legitimate business purposes' have been siphoned off by the promoters and their associates," Sebi revealed.

This rights issue was followed by another preferential allotment.

Moreover, the company appears to have not received the proceeds of this issue also.

"The repeated pattern can, therefore, be observed where the company was coming out with back-to-back issuances, which cumulatively should have raised close to Rs 162 crore, all of which, at this stage appear, to have vanished," Sebi said.

To top it all, majority of the company's reported sales and purchases are fictitious. Many of these transactions were mere book entries, which had been conjured up to inflate the balance sheet.

"The financials of the company, I am constrained to note, is a work of fiction. The entire edifice, the whole enterprise and every action of this company appear to have been geared towards defrauding investors," Sebi Whole Time Member Ashwani Bhatia said.

Accordingly, Sebi has barred Noticees 1 to 4 "from buying, selling or dealing in securities, or accessing capital market either directly or indirectly, in any manner whatsoever until further orders".

Also, the regulator has restrained barred CMD Mukesh Manveer from "holding the position of a director or a Key Managerial Personnel in any listed company, other than Debock, or any Sebi-registered intermediary until further orders".