In a significant move, the Securities and Exchange Board of India (SEBI) has issued an interim order against Bharat Global Developers Limited (BGDL) and 47 associated noticees, citing allegations of financial misrepresentation, suspicious disclosures, and fraudulent practices. As part of this action, trading in the company’s shares has been suspended until further notice.
Key Findings:
- Unprecedented Price Surge: BGDL’s stock price saw an extraordinary 105-fold increase, rising from ₹16.14 in November 2023 to ₹1,702.95 in November 2024. This raised red flags and prompted SEBI to investigate complaints regarding the company’s financials.
- Misrepresentation of Financials: SEBI’s investigation revealed that the company had negligible revenues, fixed assets, and cash flows until FY23. However, its financials for FY24-QE March showed a sudden and steep spike in revenues and expenses, which appeared inconsistent with its actual operations.
- Suspicious Corporate Actions:
- A complete overhaul of BGDL’s management occurred in December 2023, including the resignation of the statutory auditor, CFO, and directors.
- The company made preferential allotments of shares to 41 individuals, who now control 99.5% of its shareholding under the “public” category.
- Questionable claims were made about high-value contracts and business expansions, including associations with reputed entities such as Reliance Industries and Tata Agro, which SEBI found to be unsubstantiated.
SEBI’s Interim Measures:
- Suspension of Trading: Trading in BGDL’s shares on the stock exchanges has been suspended immediately.
- Market Ban: The 47 noticees, including promoters and preferential allottees, are barred from accessing the securities market until further notice.
- Asset Freeze: Bank and demat accounts of key individuals have been frozen to recover any potential unlawful gains.
SEBI’s Observations:
The market regulator noted a pattern of false and misleading disclosures aimed at inflating BGDL’s share price. The establishment of six new subsidiaries and claims of significant deals were among the misleading announcements that misrepresented the true state of the company’s business.
