Sebi bars Darjeeling Industries' MD, 9 others for alleged manipulation

Regulator says action important to prevent alleged manipulators from selling shares after lock-in ends

The Securities and Exchange Board of India (Sebi) on Tuesday barred 10 individuals from trading in the scrip of Darjeeling Industries, including Managing Director Ashok Dilpkumar Jain and several non-executive directors, for alleged manipulation.

 

The market watchdog noted that soon after Jain's appointment in October 2024, the company announced a significant increase in revenue and profits compared with previous years.

 

The ex parte interim order notes that the company was not found at its registered addresses in Mumbai or Rajkot, raising doubts about its commercial operations and public announcements. Additionally, despite having no revenue in FY23 and FY24, there was a substantial increase in the price and volume of its shares.

 

 

Further, after his appointment, the company’s board approved the preferential allotment of warrants, 66 per cent of which were allotted to entities connected to Jain.

 

The regulator has estimated that if the connected entities sell the shares, they may realise a value of Rs 29.05 crore.

 

While the probe into the matter is still under way, the market regulator highlighted the need for interim action as the lock-in period for the shares was expiring on June 30, indicating a strong possibility that the individuals could sell their shares to book profits at the cost of innocent investors.

 

“Timely intervention of Sebi is vital to protect the securities market and prevent further market abuse. It is the bounden duty of the regulator to step in at the right time, ascertain the correct facts and bring out the misdeeds of such players to light so that no further harm be caused to innocent investors,” noted Sebi Whole-time Member Kamlesh Chandra Varshney in the 62-page order.

 

Sebi has also alleged that issue proceeds meant for the company’s growth objectives were transferred by the company to certain entities whose business activities were unrelated. Some of these entities were connected to Jain. The regulator further added that multiple positive announcements were made from a non-existent address to present a rosy picture of the company.

 

The regulator’s findings also indicate a connection with an earlier alleged manipulator, Surendra Jain, who is currently under probe in another matter.

 

Sebi is also investigating the role of Ashok Jain as an operator in various other scrips.