The Security Exchange Board of India (SEBI) has suspended trading in the scrip of Bharat Global Developers Ltd till further orders. The scrip saw a steep 105-times jump in its share price from ₹ 16.14 in November 2023 to ₹ 1702.95 in November 2024.
The market regulator found the statements of Bharat Global to misrepresent the true state of affairs of the Company and its business. “The financial statements revealed that till FY23, the Company had negligible revenue, expenses, fixed assets, and cash flows. Suddenly, however, the financial results from QE March 2024 showed a steep spike in revenues and expenses,” Sebi order said.
The spike in growth relates to a false narrative about “design, engineering and construction,” and “BGDL’s expertise in delivering advanced refining technologies”, and “key projects within its robust order book, valued at over 1,500 crores from Tata Agro annual supply contract, the McCain India AgriTech project, and Dubai subsidiary orders for precious metals and stones”.
BGDL was not only concealing the true finances but deceiving investors making them believe that the Company had good business prospects, even when historically, the Company had insignificant operations . “It is thus prima facie concluded that the company has been continuously giving fake and fabricated announcements regarding the orders/ contracts meant to mislead and induce investors,” Sebi observed in the interim order.
The preliminary investigation found unexplained and unfettered price rise in the scrip was the result of wrong disclosures and misrepresented financials.
Further, the price rise was timed to benefit certain preferential allottees who offloaded shares to unsuspecting investors and made large gains.
The security market is based on the principle of disclosure for information symmetry and enables the working of a fair market. “Under the glare of mandated disclosure requirements, corporate accountability and transparency are sought to be ensured,” noted Sebi.
Sebi has found BGDL to create,” paper wealth” as the same is not founded on any genuine economic activity or production of any goods or services.
The market regulator examined the matter to ascertain whether there was any violation of the provisions of securities laws including the SEBI Act, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices in Securities Markets) Regulations, 2003, and the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.
