Debock Industries shares: There are many opportunities to earn money in the stock market. But sometimes there are attempts to trap naive investors. Especially in penny stocks. SEBI is constantly trying to stop such cases. Many types of rules have also been made. But despite this, such cases have not completely stopped. In today’s video, we will talk about one such stock, which has cheated its investors. We are talking about Debock Industries, whose shares fell to a new low of 52 weeks today on 26 August.
Why did SEBI ban it?
SEBI issued an interim order on August 23, stating that the promoters of Debock Industries had committed a massive fraud with investors. The company was listed on NSE’s ‘Innovators Growth Platform’ in June 2018 and was transferred to the mainboard of NSE in March 2022. SEBI says that the company and its promoters were deceiving investors under a well-planned scheme and they withdrew the company’s funds and used it for personal gain.
SEBI’s interim order
SEBI’s order states that the company’s promoters deliberately inflated their financial figures so that the company’s financial condition would look better and they could succeed in trapping investors. The company presented its FY 2022 sales figures by about 72% and FY 2023 figures by 77%. Similarly, purchase figures were also increased by about 94%. All this was done through complex financial transactions so that it could not be easily caught and the company’s financial health could be shown to be good.
In his order, SEBI full-time member Ashwani Bhatia said the promoters had adopted a “shocking and well-planned approach to defraud investors and mislead the regulator.”
How was this fraud committed?
According to SEBI, Debock Industries issued warrants “fictitiously” and then converted them into equity shares to falsely show its financial health during FY 2022 and FY 2023. In this way, they showed that the company had raised funds of ₹ 8.28 crore, whereas in reality only ₹ 30 lakh was received. This fraud also increased the figures of share capital and capital advances in the balance sheet of the company.
Role of Promoters
SEBI revealed that even after listing, the company continued its wrong practice and secretly transferred shares to the promoters in the off-market through preferential allotment. The promoters then sold these shares to the general public, who were unaware of all this. The result was that the promoter holding of the company came down from 64.79% to 9.41%, while on the other hand there was a big jump in public shareholding and it increased from 35.21% to 90.56%. While the company had only 171 public shareholders in March 2021, this number increased to 53,389 by March 2024.
Order for recovery of ₹89.24 crore
As soon as this fraud was revealed, SEBI took immediate action. The regulator has banned the company, its promoter and CMD (Chairman and Managing Director) Mukesh Manvir Singh from the stock market. Apart from them, another promoter Sunil Kalot and Mukesh Manvir Singh’s wife Priyanka Sharma have also been banned. SEBI said that these three had made illegal earnings of about ₹ 89.24 crores through this fraud, which has been ordered to be confiscated immediately.
Debock Industries shares hit new 52-week low
After this fraud came to light, Debock Industries’ shares saw a huge drop. The company’s shares fell by about 12 percent today. During the day’s trading, its price fell to Rs 5.82, which is its new 52-week low. Let us tell you that Debock Industries is a Rajasthan-based company and is mainly engaged in trading agricultural equipment, hospitality services and mining.
This was the entire case of Debock Industries. This case teaches us that while investing in the stock market, one should always be cautious and carefully read the performance of the companies, their background, balance-sheet. Also, before investing, always take advice from a SEBI approved advisor.
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