SEBI suspends trading in Bharat Global Developers for alleged financial misstatements, misleading disclosures, and price manipulation, impacting investors' trust.
Bharat Global Developers Ltd. (BGDL) is a company incorporated on June 15, 1992. Initially established as Perfact Weavers Pvt. Ltd., it underwent multiple name and business changes before adopting its current identity.
Unusual Stock Price Movements
Between November 2023 and November 2024, BGDL’s share price skyrocketed from ₹16.14 to ₹1,702.95—a staggering 105-fold increase. This surge raised red flags, prompting the Securities and Exchange Board of India (SEBI) to investigate. The share price of BGDL closed at ₹1,236.45 on December 20, 2024.
Key Allegations by SEBI
SEBI’s examination revealed several concerning patterns:
- False Corporate Announcements:
- BGDL reported securing high-value contracts with reputed firms such as Reliance Industries, McCain India Agro, and Tata Agro & Consumer Products. Investigations, however, revealed that these entities either denied the claims or were non-existent.
- Questionable Financial Statements:
- The company reported negligible revenues and expenses until FY23. However, financials for FY24 showed abrupt increases in revenue and expenses without substantiated business growth.
- Preferential Allotments and Price Manipulation:
- BGDL issued shares to 41 preferential allottees at a face value of ₹10 per share, who later sold them at inflated prices post-disclosures. This resulted in significant profits exceeding ₹270 crore.
- Fabricated Subsidiaries:
- BGDL claimed to have set up multiple subsidiaries, including one in Dubai, which was allegedly awarded contracts worth ₹251 crore. SEBI’s investigation found no records of their incorporation.
SEBI’s Actions
In response to these findings, SEBI has:
- Suspended trading in BGDL shares until further notice.
- Restrained key management personnel and preferential allottees from participating in securities markets.
- Frozen related bank and demat accounts to prevent further gains from fraudulent activities.
- Ordered BGDL and associated parties to submit complete disclosures of assets and transactions.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
