Stock rallies over 10,000%: Sebi suspends trading in Bharat Global Developers

“The scrip saw a steep 105 times jump in its share price from Rs 16.14 in November 2023 to Rs 1,702.95 in November 2024 ,” Sebi said in its interim order. This shows a substantial surge of 10,451.11% in one year period.

A mail sent to the company seeking comment did not elicit any response. Sebi said examination of complaints and reports in respect of BGDL revealed that the company had five promoters holding 93,860 shares comprising 16.77 per cent of total shareholding till June 2020.

However, from the quarter ended September 2020, the company disclosed nil promoter shareholding and 100 per cent public shareholding.

In December 2023, the management of the company was overhauled. Post this, the company made two preferential allotment of shares – 9.72 crore shares in April 2024 to 31 allottees and 35 lakh shares in August 2024 to 10 allottees. These large preferential allotments resulted in 99.5 per cent of the shareholding being concentrated in the hands of these 41 allottees, who were classified as “public” shareholders.

On October 30, 2024, BGDL disclosed the establishment of six subsidiaries in diverse business areas such as aerospace and defense, agro-technology and gems and mining. Immediately thereafter, beginning November 4, 2024, it started disclosing to the BSE details of certain prestigious high-value orders secured from ostensibly marquee companies such as Reliance Industries Ltd., TATA Agro & Consumer Products, McCain India Agro Pvt. Ltd. and UPL Agro Pvt. Ltd.

On November 21, 2024, BGDL disclosed that high-value orders worth Rs 251 crore had been secured by its wholly owned subsidiary based in Dubai. “All the above announcements were accompanied by a steep hike in the price of the scrip from Rs 642 on October 29, 2024, reaching its 52-week high of Rs 1702.95 on November 28, 2024,” Sebi said.

It said between November 1, 2024 to December 20, 2024, thirteen preferential allottees offloaded a total of 21,17,582 shares amounting to approximately Rs 271 crore which was around 2.09 per cent of the total shareholding of the company to public shareholders. The sale of shares began immediately after lock-in was released on October 31, 2024.

Since the shares were allotted at Rs 10, and sales were made at market price which had shot up after the company’s disclosures, a total profit of approximately Rs 269 crore was made by the thirteen preferential allottees from the first tranche.

“The financial statements of the company also appeared to misrepresent the true state of affairs of the company and its business. The financial statements revealed that till FY23, the company had negligible revenue, expenses, fixed assets and cash flows,” the interim order said.

However, the financial results from the quarter ended March 2024 showed a steep spike in revenues and expenses, which was accompanied by negligible fixed assets, negative cash flows from operating activities and huge amounts of trade receivables and payables.

“A listed company which solicits and depends on investors’ money based on information served to the public, is expected to be compliant and truthful to preserve good faith dealings in the securities market,” the interim order said.

The shocking falsities peddled by BGDL as legally mandated disclosures to the exchange lay bare a prima facie devious artifice involving systematic execution of a well-planned fraudulent scheme, the order said.

“These fraudulent and premeditated acts culminated in the desired end of price manipulation, followed by sale at artificially raised prices by entities including preferential allottees,” Sebi said.

Of the 46 individuals on whom SEBI took action, 18 have been restrained from buying, selling or dealing in securities, or accessing capital market either directly or indirectly.

The regulator has directed BGDL and 46 individuals not to deal in shares of BGDL.