The Securities and Exchange Board of India (Sebi) on Tuesday barred 10 individuals from trading in the scrip of Darjeeling Industries, including Managing Director Ashok Dilipkumar Jain and several non-executive directors, for alleged manipulation. According to reports from The Hindu BusinessLine, the market watchdog issued an ex parte interim order against these individuals following its investigation into the company's activities. In a comprehensive 62-page interim order, Sebi accused the promoters and associates of orchestrating an elaborate scheme involving circular funding, questionable use of preferential issue proceeds and suspected stock manipulation. The regulator's examination covered the period between September 2024 and December 2025, though it also examined transactions beyond this period to trace the flow of funds.
The regulator's investigation revealed that Ashok Jain allegedly funded preferential issue proceeds through connected entities and family members, with the company allotting 70 lakh warrants to ten non-promoter investors with an initial subscription amount of ₹2.94 crore. As reported by The Hindu BusinessLine, Sebi alleges that ₹1.71 crore, or 58.16% of that amount, was prima facie funded by Jain through family members and connected entities, raising questions over whether the purported investors were genuine independent subscribers. The regulator further alleged that shortly after receiving subscription money, Darjeeling Industries transferred the entire ₹2.94 crore to Jain within two days before the funds returned to the company and were subsequently routed to multiple entities. The company's revenue had been negligible for two years before Ashok Dilipkumar Jain became Managing Director in October 2024, after which the company reported a sharp improvement in financial performance.
After his appointment, the company's board approved the preferential allotment of warrants, with 66 per cent of these warrants allotted to entities connected to Jain. According to the regulator's findings reported by The Hindu BusinessLine, Sebi has estimated that if the connected entities sell the shares, they may realise a value of ₹29.05 crore. The regulator also alleged that issue proceeds meant for the company's growth objectives were transferred to certain entities whose business activities were unrelated, with the company allotted ₹11.76 crore through convertible warrants before allegedly routing much of the money through unrelated businesses. Payments were made to companies operating in businesses unrelated to DIL's stated agricultural trading operations, including baby care products, aluminium recycling, laundry services and food processing, raising doubts over the commercial purpose of the transactions.
Investigators visiting Darjeeling Industries' reported Mumbai registered office found the premises occupied by an unrelated finance company that had purchased the property earlier, even though the listed company continued to disclose the address for board meetings. A second inspection at the company's declared Rajkot office found the premises locked, with no signage or evidence that the company operated there. The company's disclosed website was also found to be non-functional. According to The Hindu BusinessLine, Sebi relied on WhatsApp chats recovered during a separate investigation involving Surendra Jain, in which Ashok Jain allegedly discussed deals relating to Darjeeling, company expenses, shareholder lists and market operations. The regulator observed that these conversations, along with trading patterns and fund flows, indicate a common purpose of manipulating DIL's shares and referred to discussions on shareholder lists, company affairs and payments. The evidence gathered from electronic devices and WhatsApp chats indicates Jain was in contact with Surendra Jain, who is already under investigation in another SEBI matter.
The regulatory action has significantly impacted Darjeeling Industries stock performance, with the share price declining 3.51% from the previous close of ₹37.31 to ₹36.00 as of June 30, 2026. The company's market capitalization stands at ₹28.30 crore, reflecting the ongoing market concerns following Sebi's investigation findings. The stock's 52-week high of ₹75.47 and low of ₹23.25 indicate substantial volatility in recent trading periods. Sebi moved with unusual urgency because the lock-in on a large portion of the preferentially allotted shares was due to expire on June 30, creating what it described as a risk that the noticees could sell their holdings and book wrongful gains at the expense of public investors. The interim order restrains all 10 noticees from dealing in DIL shares until further orders and directs them to cooperate with the ongoing investigation. The noticees have been given 21 days to file their replies and seek a personal hearing.
