SEBI bars Dhenu Buildcon in Rs 1,000 crore roundtripping case

The Securities and Exchange Board of India (SEBI) has barred Dhenu Buildcon Infra Ltd, a former NBFC, and its key promoters Surendra Kumar Jain and Virendra Jain from the capital markets for alleged round tripping of funds. In an interim order released on August 19, SEBI whole time member Kamlesh Chandra Varshney said the transactions constituted a coordinated arrangement involving round tripping and conversion of unsecured loans into equity shares.

SEBI alleged that Dhenu Buildcon created a Rs 1,000 crore unsecured loan in its books through 46 transactions over eight days, and then converted about Rs 840 crore of that into equity shares via preferential allotment. This allowed six entities to acquire 99.70% of DBIL's outstanding equity. The order noted that an amount of about Rs 25.05 crore was repeatedly routed through a network and returned to DBIL, with the original source of funds remaining unverified. The six entities that received the shares had no physical existence.

The regulator has barred Dhenu Buildcon from taking any direct corporate actions. The two Jain promoters are restrained from the capital markets until further orders. SEBI also directed BSE to suspend trading of two companies that were part of the preferential allotment, and asked BSE and MSE to take action against 13 other firms mentioned in the order that had no physical existence.