SEBI orders action over ₹49.50 crore fund diversion at Debock Industries

This is a final order by SEBI regarding Debock Industries Limited and 28 other individuals and entities, examining allegations of fraudulent practices including fictitious preferential issues, inflation of sales and purchases, and diversion of funds raised through a rights issue.

Who it concerns: Debock Industries Limited, Mr. Mukesh Manveer Singh, Mr. Sunil Kalot, Ms. Priyanka Sharma, Mr. Kailash Brahmabhatt, Mr. Arvind Rao, Ms. Sanjeeda Dagar, Mr. Sonu Sharma, Mr. Akash Kumar, Ms. Nishu Goyal, Ms. Vandana Patidar, Mr. Raju Ajmera, Mr. Abhishek Khandelwal, Ms. Najiya Bano, Mr. Bharu Ram, Mr. Rahul Khurana, Ms. Sheetal Jain, Mr. Ajay Dahiya, Mr. Harish Kumar Sharma, Mr. Rajesh Kumar Vishwas, Ms. Chetna, Mr. Kadir Kha, Mr. Mahaveer Prasad Panchal, Mr. B Pavan Kumar Sharma, Avance Ventures Private Limited, Impex Agrotech Limited, Mr. Gaurav Jain, Naturo IndiaBull Limited, and Ms. Jyoti Choudhary.

What SEBI found or ordered

• SEBI alleged the company met main board eligibility criteria through fictitious preferential issues of warrants.
• SEBI alleged the company inflated sales by approximately 72% in FY22 and 77% in FY23, and purchases by approximately 94% in both years.
• SEBI alleged the company submitted fabricated bank statements to conceal these issues.
• SEBI alleged that ₹49.50 crore raised through a rights issue in June 2023 was diverted to promoters and related entities.
• SEBI alleged violations of PFUTP Regulations, SEBI Act, and LODR Regulations by the company and its directors/officers.
• SEBI called upon noticees to show cause why directions to restrain from accessing the securities market and disgorgement of ill-gotten gains should not be issued.
• SEBI called upon certain noticees to show cause why an inquiry and penalty should not be imposed.

Also in the document

• The order is a Final Order, concluding the proceedings initiated by an interim order dated August 23, 2024.
• The alleged diversion of funds involved a significant amount of ₹49.50 crore.
• The allegations involve multiple individuals, including the Managing Director, Audit Committee members, and other entities accused of aiding and abetting the scheme.