SEBI orders Second Land Developers Pvt Ltd and its officials to repay ABG Shipyard LTD Rs 101 crore.

Markets regulator Sebi has ordered Second Land Developers Pvt Ltd (SLDPL) now established as Shivris Resources Pvt Ltd, and its senior officials to compensate ABG Shipyard Ltd in three months for illicit profits of a little over Rs 101 crore. The sum has to be paid along with an 8% annual interest rate.

Second Land Developers is now known as Shivris Resources Pvt Ltd, previously known as ABG Resources. The company also serves as an ABG Shipyard promoter group entity. Senior officials-Rishi Agarwal and Kamlesh Kumar Agarwal-were Second Land Developers Directors, promoters of ABG, and even holding the position of ABG Chairman.

The matter involves the diverting of funds to the extent of ABG’s Rs 101 crore for unfair gain to Second Land Developers. This generates a financial liability for the company’s public shareholders and fraudulent profits for the promoter group entity. In fact, the financial results announced by ABG Shipyard for the 2008-14 financial years have also been inaccurate and misrepresented.

“ABG, a publicly listed firm, used the three companies to procure fake purchasing bills in compliance with Rs 101 crore and used the cash produced from these fake transactions to clear unlawful encroachments on land belonging to SLDPL, a promoter group entity. The business has even misrepresented the accounts and published false financial statements for FY 2008-14 to facilitate the whole fund diversion artifice,” Sebi said.

SLDPL and senior officials exceeded the rules of Prohibition of Fraudulent and Unfair Trading Practices and were ordered to refund ABG Shipyard for the unlawful gains.

Among other directions, the companies were prohibited from accessing the securities market for four years from the date the refund is concluded, and senior officials were ordered not to occupy any key managerial roles in any listed company during the restraint period.

The refund instructions “shall take effect on the expiry of two months from the date of this order considering the exceptional condition caused by the pandemic COVID-19,” Sebi said in an order dated March 24.