Stock Soars 113 Times, From Rs 15 to Rs 1,702, SEBI Suspends Trading

Shares of Bharat Global Developers hit lower circuit on December 23 after the Securities and Exchange Board of India (SEBI) suspended trading in the stock until further notice. SEBI also banned the company’s promoters from accessing the capital markets indefinitely. 

The action follows a complaint filed on December 16, 2024, and social media allegations about questionable financial disclosures. The complaint highlighted a meteoric rise in the company’s stock price, which soared 113 times over a year—from Rs 15 on October 23, 2023, to Rs 1,704 on November 28, 2024, reflecting a 11,246% increase. 

SEBI’s preliminary investigation found that the company’s financial statements did not reflect its true state. Up until the financial year ending 2023, Bharat Global Developers reported minimal revenue, expenses, and assets. However, its March 2024 quarter results showed an unexpected surge in both revenues and expenses. 

These changes occurred after key events, including a management overhaul in December 2023, preferential allotments of shares, and major business deals. Additionally, the company set up six new subsidiaries on October 30, 2024, a day before the lock-in period for the preferential shares expired. 

SEBI Acts Against Bharat Global Developers for Fraud

SEBI has taken strict action and instructed all parties to disclose a list of their assets within 15 days of the order. SEBI stated that Bharat Global Developers misrepresented its design, engineering, and construction business, deceiving investors into buying its shares based on false disclosures.

Initial investigations revealed that Bharat Global falsely claimed to have received orders from McCain Group, Reliance Industries, UPL, and Tata Group. It appears that fake names of companies, resembling well-known firms, were used in these claims.

While India Global claimed to have received orders from companies like McCain India Agro Pvt., UPL Agro Pvt. Ltd., and Tata Agro & Consumer Products, SEBI’s investigation showed that none of these companies had any such subsidiaries.

The company’s management was involved in a major mess, including approving preferential allotments to 41 people. SEBI found that these actions were part of a larger scheme to manipulate share prices through false claims. The individuals who received the shares profited by selling them at inflated prices, causing financial losses to investors.

Between November 1 and December 20, 2024, over 2% of BGDL’s shares were sold at fake, inflated prices to investors, leading to losses. Additionally, the number of public shareholders rose from 10,129 in September to around 45,000 by December, despite the shares being largely controlled by preferential allottees.

An investigation has revealed fraudulent activities, including the manipulation of share prices, leading to actions against the involved entities. These entities have been barred from participating in the securities market or dealing in shares. Additionally, their assets have been impounded, and bank accounts have been frozen to prevent further misconduct.

The Securities and Exchange Board of India (SEBI) has directed a detailed investigation into the fraudulent scheme, with a completion deadline set for March 2025. Meanwhile, the public is advised to exercise caution when considering investments in companies with suspicious or misleading disclosures. In an effort to protect investors, corporate actions like bonus issues and stock splits have been halted.

SEBI is further examining the findings to ensure compliance with regulatory standards, deadline set for March 2025.

Bharat Global Defers Bonus Issue Amid SEBI Review

Bharat Global clarified that the matter is under review but reaffirmed its commitment to regulatory compliance, transparency, and strong corporate governance. 

In a stock exchange filing, the company announced that after discussions with its legal and compliance teams, and considering the interim order, it has decided to temporarily delay setting the record date for its planned bonus issue and stock split. 

The company emphasized its dedication to protecting shareholder interests and stated it is actively cooperating with SEBI to address the issues raised. Bharat Global is confident of resolving the matter fairly and constructively but did not provide a timeline for the resolution. 

SEBI’s order alleged that the company misled investors by making false disclosures and fabricating orders and contracts. It stated that the sharp rise in Bharat Global’s share price was due to these misleading practices and was timed to benefit certain preferential shareholders.