Sebi Accuses Debock Industries Of Defrauding Investors, Regulators

Financial markets regulator SEBI has accused Debock Industries of defrauding investors and deceiving regulatory authorities. Debock Industries is a company listed on the National Stock Exchange of India Limited (NSE) having its registered office at 51, Lohiya Colony, 200 ft Bypass, Vaishali Nagar, Jaipur.

As per the annual report of the Company for FY23, Debock is primarily engaged in trading agricultural equipment, hospitality services, and mining. The company was initially listed on the Innovators Growth Platform on June 05, 2018. Subsequently, it migrated to the main board of NSE on March 31, 2022.

"An examination by NSE indicated that there was a significant increase in revenue and purchases recorded in the books of the Company in FY22 and FY23. The period during which the Company recorded higher revenues matched with the period the Company migrated to the main board of NSE," regulator SEBI, in an interim ex-parte order, said on Friday.

The actions of the company, SEBI said, prima facie, reveal a brazen and calculated effort to defraud investors and deceive regulatory authorities. "The case, based on material placed before me, does not appear to be a run-of-the-mill case. The promoters have clearly indulged in siphoning off funds from the Company. It also appears that the very purpose behind listing this Company was to defraud investors and make huge gains for personal benefit," the SEBI said.

The preferential allotment made by the company, on examination of the trail of payments, SEBI said, it was, prima facie, found that fund transfers to the account were made in a “circuitous manner”. The preferential allotment of shares 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," the SEBI order said. In another revelation, SEBI said the company came out with a rights issue after its stock market listing, where the promoters did not participate and the entire proceeds from the rights issue funds which should have been used for legitimate business purposes have been siphoned off by the promoters and their associates.

To top it all, the majority of the company's reported sales and purchases are "fictitious", SEBI's interim ex-parte order said. Many of these transactions were mere book entries, which had been conjured up to inflate the balance sheet, the financial market regulator said. “The financials of the Company, I am constrained to note, is a work of fiction.”

The whole enterprise and every action of this company appear to have been geared towards defrauding investors, SEBI said. “This blatant masquerade of potential deception and fraud casts a shadow on the reputation of every honest Company that strives to uphold the principles of integrity and transparency in our markets. Such apparent brazen manipulation is nothing short of a betrayal of investor trust a situation that demands swift and uncompromising action.”

Against that backdrop, SEBI has restrained Mukesh Manveer Singh, one of the notices, 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. All four notices are restrained from buying, selling, or dealing in securities, or accessing the capital market either directly or indirectly, in any manner whatsoever until further orders, SEBI said.

An amount of over Rs 89 crore being the alleged total unlawful gain earned from the alleged fraudulent activities carried out by the three individual notices is impounded.

They are directed to credit/deposit the amount of unlawful gains to an interest-bearing escrow account created specifically for the purpose in a Nationalized Bank within 15 days. (ANI)