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New Delhi: In a major regulatory crackdown, the Securities and Exchange Board of India (SEBI) has issued an ex parte interim order barring Darjeeling Industries Limited (DIL)’s Managing Director Ashok Dilipkumar Jain and nine other connected entities from trading in the securities market. In a 62-page order, the SEBI has detailed the accused sophisticated scheme of stock manipulation, circular funding networks and the diversion of preferential issue proceeds into shell companies and unrelated retail businesses.
According to SEBI, the manipulation began shortly after Ashok Jain assumed the role of director in October 2024. The company quickly approved a massive preferential allotment of 70 lakh convertible warrants targeting supposedly independent investors to raise Rs.11.76 crore. Alleged to the ‘mastermind’ behind the scam, Ashok Jain then transferred Rs.2.94 crore of investor money into a complex web of entities, with almost Rs.1.71 crore of this being directly or indirectly linked to Jain or his close associates.
After Jain joined as MD, the company reported sharp increases in revenues and profits as compared to the earlier years, even as the company reported zero operating revenue between FY23 and FY24. DIL also claimed to expand into unrelated, capital-heavy industries, from its agro commodity business. SEBI said that the company did not exist at the corporate address disclosed.
The SEBI had passed urgent interim orders as the preferential allotment was due to expire on June 30, impacting investors. “Once lock in is over, there is a strong possibility that noticees would start selling their shares to book profit at the cost of innocent investors,” SEBI Whole-Time Member Kamlesh Chandra Varshney said.
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