SEBI Halts Trading in Bharat Global Developers Over Financial Misrepresentation & Market Manipulation
Moneylife Digital Team 27 December 2024
The Securities and Exchange Board of India (SEBI) order about the affairs of Bharat Global Developers Ltd. (BGDL), a company listed on the Bombay Stock Exchange (BSE), paints a picture of a multi-faceted scheme involving preferential allotments, false corporate announcements and a meteoric rise in the company's share price, potentially violating numerous securities laws.
 
The investigation was prompted by social media posts and a complaint filed on 16 December 2024, which drew attention to the company's extraordinary share price surge. BGDL's stock had risen dramatically from Rs16.14 in November 2023 to Rs1,702.95 in November 2024, marking a 105-fold increase.
 
BGDL, formerly known by various names including Perfact Weavers Private Limited and Kkrrafton Developers Ltd., has undergone a significant transformation in its operations and management since December 2023. The company's five promoters, who collectively held a 16.77% stake until June 2020, relinquished their entire shareholding, resulting in a 100% public shareholding structure.
 
Following the change in shareholding pattern, BGDL embarked on a series of preferential allotments that altered its equity. In April 2024, the company allotted 9.72 crore equity shares to 31 non-promoter preferential allottees, exponentially increasing its paid-up equity share capital from Rs0.56 crore to Rs97.76 crore. This was followed by a second tranche of preferential allotment in August 2024, where 35 lakh equity shares were issued to an additional 10 allottees.
 
SEBI's investigation revealed that the preferential allotment in March 2024 was made at an issue price of Rs10 per equity share, while the company's closing price on the last trading day before the allotment was Rs120.10 per share. This significant discount, amounting to over 91%, raised serious concerns about the potential exploitation of minority shareholders.
 
The preferential allottees, identified as noticees 1 to 19 and 38 to 47 in SEBI's interim order, appear to have been part of a coordinated scheme to offload their shares at inflated prices. SEBI found that 19 of these preferential allottees had offloaded their shares within a short period, reaping substantial profits. For instance, noticee 1, identified as Rajesh Gupta, purchased 3.61 crore shares at Rs10 per share and sold them at an average price of Rs1,455.41 per share, resulting in a profit of Rs1,149.41 crore. Similarly, noticee 2,  Priya Sharma, made a profit of Rs214.82 crore, and noticee 3, Aditya Verma, profited by Rs179.20 crore through their offloading activities.
 
Concurrent with the preferential allotments, BGDL began making a series of corporate announcements that painted a picture of a rapidly expanding and diversifying business. The company disclosed the establishment of six new wholly-owned subsidiaries and the securing of several high-value orders from reputable companies such as McCain India Agro Pvt Ltd and Reliance Industries Ltd.
 
In quick succession, BGDL announced the securing of several high-value orders from reputable companies such as McCain India Agro Pvt Ltd and Reliance Industries Ltd. The company claimed to have secured a Rs300 crore order from McCain India Agro Pvt Ltd for the supply of 2,00,000 tonnes of Kufri Ashoka potatoes over six months. Additionally, BGDL announced a Rs120 crore order from Reliance Industries Ltd. for the design, engineering, and construction of a high-capacity fluidised catalytic cracker (FCC) unit, to be executed within six months.
 
However, SEBI's investigation revealed that these 'high-value orders' were either completely fabricated or significantly exaggerated. The respective counterparties, McCain India Agro Pvt Ltd and Reliance Industries Ltd, have denied the existence of such contracts with BGDL. Even more scandalous, BGDL itself later corrected the value of the Reliance Industries Ltd order from Rs300 crore to Rs120 crore, further casting doubt on the company's credibility.
 
The impact of these false and misleading disclosures on BGDL's share price has been nothing short of dramatic. Following the revocation of its suspension from trading on the BSE in November 2023, the company's share price began a rise, reaching an all-time high of Rs1,702.95 on 28 November 2024. This  sharp increase in the share price, which was not supported by any genuine business performance or financial results.
 
SEBI's examination of BGDL's financial statements has also uncovered anomalies. The company's revenue, which was negligible in the eleven financial years from 2012-13 to 2022-23, suddenly spiked from Rs0.04 crore in 2022-23 to Rs 25.78 crore in 2023-24 and further to Rs283.54 crore in the six-month period from April to September 2024. 
 
Based on its investigation, SEBI has outlined its prima facie findings in the interim order. The regulator believes that BGDL has engaged in a scheme to mislead investors through false and fabricated announcements, as well as misrepresentation of financial information. These actions are believed to be in violation of various provisions of the SEBI Act and related regulations, including the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and the Listing Obligations and Disclosure Requirements (LODR) Regulations.
 
In response to these findings, SEBI has imposed the following interim measures:
1. Trading in the scrip of Bharat Global Developers Ltd. is suspended until further orders.
 
2. Noticees 1 to 5 and 7 to 19, the preferential allottees who have offloaded their shares, including Rajesh Gupta,  Priya Sharma, and  Aditya Verma, are restrained from buying, selling, or dealing in securities, or accessing the capital market, either directly or indirectly, until further orders.
 
3. Noticee 6, identified as Neha Kapoor, the compliance officer of BGDL, is restrained from associating with any intermediaries registered with SEBI, any listed public company, or any company that intends to raise money from the public, until further orders.
 
4. SEBI has directed the appointment of an independent auditor to conduct a forensic audit of BGDL's financial statements and has prevented the company from undertaking any proposed bonus issue or stock split.
 
The regulator has also provided the opportunity for the noticees to file their replies and objections to the interim order within 21 days and request a personal hearing, if desired.
 
Comments
chaudharygaurav835
2 months ago
What we loss all the money or any hope for return money back please let us know if any hope from SEBI
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