Sebi directs Second Land Developers, officials to refund Rs 101 cr to ABG Shipyard

Markets regulator Sebi has directed Second Land Developers Pvt Ltd (SLDPL), now known as Shivris Resources Pvt Ltd, and its senior officials to pay illegal gains of a little over Rs 101 crore to ABG Shipyard Ltd within three months. The amount has to be paid along with an annual interest rate of 8 per cent.

Second Land Developers, also called ABG Resources, is now known as Shivris Resources Pvt Ltd. The firm is also a promoter group entity of ABG Shipyard. The senior officials -- Rishi Agarwal and Kamlesh Kumar Agarwal -- were directors of Second Land Developers, promoters of ABG, and also held the position of chairman in ABG.

The matter pertains to diversion of funds to the tune of Rs 101 crore from ABG for undue benefit to Second Land Developers. Thereby, creating a financial loss to the public shareholders of the company and illegal gains to the promoter group entity. Besides, the financial results declared by ABG Shipyard for the financial years 2008-14 were also incorrect and mis-stated.

"ABG, a publicly listed company, has utilised the three entities for obtaining bogus purchase bills to the tune of Rs 101 crore, and utilised the cash generated out of such bogus transactions towards the removal of illegal encroachers on the land belonging to SLDPL, a promoter group entity. The company has also mis-stated the accounts and published incorrect financial results for FY 2008-14 in order to facilitate the entire artifice of fund diversion," Sebi said. SLDPL and the senior officials have violated the Prohibition of Fraudulent and Unfair Trade Practices norms and have been directed to refund the illegal gains to ABG Shipyard.

Among other directions, the entities have been restrained from accessing the securities market for four years from the date of completion of refund and the senior officials have been directed not to hold any key managerial position in any listed entity during the period of restraint. The directions related to refund "shall take effect on the expiry of two months from the date of this order in view of the extraordinary situation caused by COVID-19 pandemic," Sebi said in an order dated March 24.

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