SEBI bars Debock Industries, its MD Mukesh Singh for 7 years; slaps penalty

SEBI on Friday barred Debock Industries Ltd and its managing director Mukesh Singh for seven years and ordered disgorgement of unlawful gains totalling ₹59.30 crore from multiple individuals in a case involving an alleged accounting fraud.

Also, other entities have been barred from the securities market for periods ranging from three to five years, according to SEBI's final order.

The markets regulator has also directed Debock Industries to bring back ₹49 crore diverted from its 2023 rights issue, along with applicable interest.

The Securities and Exchange Board of India (SEBI) has also slapped penalties totalling more than ₹29 crore on the company, Singh and others. Singh alone has been fined ₹20.10 crore.

Summing up the alleged scheme, SEBI in its 121-page final order said Debock Industries, with Singh at the helm, inflated its financials through fictitious sales and purchases and circular transactions after its listing on NSE Emerge.

“Noticee No. 1 (Debock Industries) with Noticee No. 2 (Singh) at the helm of its affairs, post its listing on NSE Emerge, inflated its financials through fictitious sales and purchases and circular transactions. The inflation of financials allowed Noticee No. 1 to migrate to the main board of NSE,” SEBI said.

“On the main board, Noticee No.1 (Debock Industries) came up with fraudulent issuance of preferential allotments, bonus issue and rights issue, and increased its capital base,” it said.

Later, around 4.21 crore shares worth ₹59.30 crore obtained through fraudulent preferential issue and bonus issue were dumped on gullible investors.

“The fraudulent scheme was masterminded by Noticee No. 2 (Singh) with aid and assistance of Noticee No. 3 (Sunil Kalot), 4 (Priyanka Sharma) and 27 (Gaurav Jain),” SEBI added.

The regulator quantified the unlawful gains at ₹59.30 crore. Of this, ₹37.67 crore was attributed to Sunil Kalot, ₹4.24 crore to Singh, and ₹17.40 crore to Singh jointly with Gaurav Jain.

The regulator found Debock Industries and Singh liable for claiming non-existent purchases and sales as genuine, showing fictitious receipt and utilisation of application money in preferential allotments, and inflating sales and purchases through circuitous transactions and fraudulent ledger entries.

These transactions resulted in misstatement of the company's financials for FY 2021-22, FY 2022-23 and FY 2023-24, SEBI said.