SEBI bars two in Dhenu Buildcon case over alleged fabricated-loan scheme
In an interim order, SEBI said ₹25 crore was repeatedly circulated through connected accounts to simulate ₹1,000 crore of loans, while ₹840 crore of debt was converted into equity.
What changed
SEBI issued interim directions in the Dhenu Buildcon matter over an alleged fabricated-loan and preferential-allotment structure.
Why it matters
The alleged fund circulation and debt-to-equity conversion raise governance, disclosure and market-integrity issues relevant to investors and compliance teams.
Who is affected
Small-cap investors, listed-company directors and promoters, auditors, intermediaries and compliance teams.
Action required
Treat the allegations as interim findings only; review subsequent SEBI proceedings before relying on them as final conclusions.
## What changed
SEBI has passed an interim order against Surendra Kumar Jain and Virendra Jain in connection with Dhenu Buildcon Infra, alleging a scheme that used repeated movement of funds through connected accounts to create the appearance of much larger loans.
According to SEBI, about ₹25 crore was repeatedly circulated to simulate ₹1,000 crore of loans. The regulator also said ₹840 crore of purported debt was converted into equity through a preferential allotment to six entities. SEBI barred the two individuals from the securities market and restricted Dhenu Buildcon from corporate actions including bonus issues, rights issues and dividends while the interim directions remain in force.
SEBI said the company’s market capitalisation increased from about ₹3 crore to ₹4,925 crore — more than 1,600-fold — despite negligible changes in revenue and profit.
## Why it matters
The case is a useful reminder that reported balance-sheet expansion, related-party fund flows and preferential allotments require scrutiny together rather than in isolation. Circular movement of funds can create an appearance of financing activity without corresponding economic substance.
## Finin2min takeaway
This is an interim regulatory order, not a final finding of guilt. Investors should distinguish SEBI’s allegations and prima-facie conclusions from a final adjudication, and should review the full order and subsequent proceedings before drawing conclusions about liability.
**Watch next:** responses from the noticees, further SEBI directions and any final order.
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