Less than a year after its listing, the Securities and Exchange Board of India (SEBI) has barred Kalahridhaan Trendz, along with its managing director Niranjan D Agarwal and two others, from the securities market for alleged lapses in material disclosures and false and misleading communications to stock exchanges.
The investigation, which was triggered after HDFC Bank filed a complaint over loan default, revealed that the small and medium enterprise (SME) had not disclosed its loan defaults. SEBI also found false disclosures regarding an order worth ₹115 crore from Bangladeshi firm Beximcorp Textiles and misrepresentations about company expansions.
“The false and misleading corporate announcements positively affected the price and trading volume in the scrip. It appears that the company had made the said corporate announcements to paint a rosy picture of the prospects of the company and to induce investors to trade in the shares of the company. By acting in such a manner, the company has indulged in fraudulent and unfair trade practices in the securities market,” SEBI’s whole-time member Ashwani Bhatia said in an interim order-cum-show-cause notice.
Bhatia said the interim directions were necessary as the SME had approved a rights issue worth ₹21 crore, and the promoter lock-in post-IPO ends on February 23, which would allow them to exit the company, “leaving gullible investors in the lurch.”
“There is a risk that if further fundraising is not stopped, the public shareholders, lured by the false and misleading corporate announcements made by the company in the recent past, may be tempted to invest further in the company and suffer losses in the long run,” SEBI said.
The SME and others have been asked to show cause why an inquiry and penalty should not be imposed. They have 21 days to file a reply or objection to the interim order.