SEBI Cracks Down on Fabricated Orders: KTL, ASL Under Investigation for Fraudulent Claims

The Securities and Exchange Board of India (SEBI) has exposed a major case of corporate fraud involving Kalahridhaan Trendz Ltd (KTL) and Akshar Spintex Ltd (ASL). Both companies allegedly used a non-existent entity, Beximcorp Textiles, to announce fake orders worth hundreds of crores, misleading investors and potentially allowing promoters to exit at inflated prices. The regulator has acted swiftly, banning the companies and their related entities from the market to prevent further manipulation.

SEBI Uncovers Fabricated Orders Linked to Fake Company

In an interim order issued on February 11, 2025, SEBI revealed that KTL and ASL falsely claimed to have received significant orders from Beximcorp Textiles. KTL announced an order worth ₹115 crore in August 2024, while ASL had previously stated it secured a ₹171 crore contract in November 2023. However, investigations revealed that no such company exists in Bangladesh.

The name Beximcorp Textiles closely resembles Beximco Textiles Ltd, a part of one of Bangladesh’s largest conglomerates, raising suspicions that the companies deliberately used the similarity to mislead investors. SEBI’s inquiry into Bangladesh’s corporate database found no registered entity under the name Beximcorp Textiles, nor any connection with the Akij Group, another major Bangladeshi company KTL claimed as its associate.

ASL Promoters' Suspicious Stake Sale Raises Red Flags

The case of ASL raised further alarms. The company’s promoters offloaded their stake aggressively, reducing their holdings to a mere 0.27% in October 2024, just months after making their exaggerated order claims. SEBI suspects that corporate actions such as rights issues and bonus issues were strategically used to inflate share prices, providing an unfair exit to promoters before later announcing that the order had been "canceled."

SEBI is now investigating whether KTL's promoters planned a similar exit strategy, prompting the regulator to act swiftly and ban them from selling shares post their lock-in period ending on February 23, 2025.

Fabricated Documents and False Contact Details Exposed

During its investigation, SEBI demanded contract details from KTL regarding the so-called Beximcorp Textiles deal. The company provided a contract document, but when SEBI contacted the listed representatives, it was discovered that one of the contact numbers belonged to KTL’s whole-time director, Aditya Agarwal, the son of KTL’s director, Niranjan Agarwal.

When pressed further, KTL provided another contact, which also turned out to be fake. Investigators found that: Beximcorp’s website was non-functional.

The provided email ID was a generic Gmail address that had been last used in May 2024—months before the supposed order was placed in August 2024.

Phone numbers linked to the alleged company belonged to unrelated UAE residents.
Based on these findings, SEBI concluded that KTL had fabricated email communications and documents to mislead investors and the regulator about receiving a large order from a Bangladesh-based entity.

Urgent Action to Protect Investors

Given the severity of the case, SEBI swiftly banned KTL, ASL, and related entities from the market until further notice. The regulator also blocked a planned rights issue by KTL, ensuring that unsuspecting public shareholders wouldn’t suffer losses due to false corporate announcements.

In his order, SEBI’s Whole-Time Member Ashwani Bhatia cautioned investors against blindly trusting misleading corporate announcements, comparing them to children following the proverbial Pied Piper of Hamelin. He emphasized that markets cannot sustain outlandish gains without strong fundamentals, and urged investors to be more vigilant.

Conclusion

SEBI’s crackdown on KTL and ASL highlights the growing risk of fraudulent corporate practices designed to deceive investors. The use of a fictitious entity to manipulate stock prices, facilitate promoter exits, and attract investment underscores the need for stricter scrutiny. The regulator’s swift action serves as a warning to companies engaging in similar schemes, ensuring that public investors are protected from manipulation and market deception.