Murli Industries

Money laundering price rigging Accounts probably fake too

heres what the Murli promoters did

They created 10 fake companies

they then got the dangui grp (operators) to ramp up and give liquidity to the companies shares

they placed the fccbs at a high price of 565 based on danguis circular trading

the accounts are probably cooked

here are some relevant pieces for the sebi order

http://watchoutinvestors.com/Press_Release/sebi/SanjayDangi.PDF?cntrl_no=COMP5307


1. The Securities and Exchange Board of India (hereinafter referred to as
SEBI) had received a reference dated November 27, 2009 from the Office of the
Assistant Commissioner of Income Tax, Central Circle, Nagpur (hereinafter
referred to as the IT Department), containing certain findings in the matter of
Murli Industries Limited (hereinafter referred to as the company). It was stated in
the said reference that the following ten entities were holding substantial shares
of the company:
i. Ambaji Papers Private Limited
ii. Inco Infrastructures Private Limited
iii. Kanhaiya Mining & Minerals Private Limited
iv. Krishnum Investments Private Limited
v. Lakhi Packaging Private Limited
vi. Ramji Agri Business Private Limited
vii. Ramkrishna Fabrication & Machineries Private Limited
viii. Runicha Alloys & Steel Private Limited
ix. Simple Mining & Power Private Limited
x. Taitan Management Services Private Limited

2. In their reference, the IT Department had also stated that the affairs of the
aforesaid ten companies (hereinafter referred to as ten entities) were being
looked after by one Amit Raja CA, who happened to be their auditor. The IT
Department had found certain documents in the office of the company suggesting
manipulation in the share price of the company and stated as under:
“4.1 Page 7 & 8:- Theses pages are duly signed by one of the director Mr. Lalchand
Maloo. These papers pertain to period 12.12.2006 and 31.1.2007 just before the issue of FCCB. These papers indicate strategy to manipulate in the price of the shares before theFCCB. Further it also indicates the sharing of funds with one Mr. Sanjay Dangi”.

3. The IT Department, had also forwarded the certified true copies of the
above mentioned pages (7 and 8), which appears to have been signed by one
Sanjay Dangi and Mr. Lalchand Maloo (one of the directors of the company) on
behalf of the company. It was stated in page 7 of the document that after the
expenditure on Foreign Currency Convertible Bonds (hereinafter referred to as
FCCBs) and base price, the difference amount was to be shared between Mr.
Sanjay Dangi and the company in the ratio of 40% and 60%, respectively. The IT
Department had concluded the following:
“5.1 All the aforesaid 10 companies are dummy companies floated by M/s Murli Industries Ltd. All the directors of these companies are of no means to carry out huge transactions running into Millions of Rupees.

4. The IT Department further referred the alleged manipulation in the shares
of the company, to SEBI, for further necessary action. A plain reading of the
certified true copy of documents, which IT Department had found during their
survey at the offices of the company, prima facie indicated a well laid down
strategy planned by promoters of the company along with Mr. Sanjay Dangi to
manipulate the share price of the company before the issuance of the FCCBs.

5. In light of the aforesaid reference and documents received from the IT
Department regarding the manipulation in the shares of the company and the
profit sharing arrangement between the company and Mr. Sanjay Dangi, SEBI
initiated a preliminary inquiry in the matter to find as to whether there was anyconcentration of shareholding of the company among the ten entities and
whether there was any attempt to manipulate the shares of the company before
the FCCB issue. The preliminary findings of SEBI are given below:

6. The company, which was earlier known as Murli Agro Products Limited,
has its registered office at Jai Bhawani Society, 101, Central Avenue,
Wardhaman Nagar, Nagpur. The shares of the company are listed at the Bombay
Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited
(NSE). The shares of the company started trading at NSE only from February 19,
2007. Since, according to IT Department, the ten entities (mentioned in
paragraph 1 above) are dummy companies floated by the company and were
holding substantial shares in the company and had manipulated its share price,
SEBI obtained the ‘Know Your Client’ documents from stock exchanges/
depositories in respect of such entities. SEBI had also obtained information about the said companies from the website of Ministry of Corporate Affairs. Such details are given in Annexure A to this order. Analysis of the information so obtained revealed that all the ten entities are apparently related to each other as well as to the company and its promoters.

• The ten entities had given a common phone number (0712–2778910) belonging to one “Raja Mit Jayantilal” with the address as Sewa Sadan Square Kamdar Complex C.A. Road Gandhi Bagh Nagpur-440002.

• As per filings made by the said ten entities with the Registrar of Companies (RoC), the electronic mail (e-mail) address has been given as “ar.nagpur@gmail.com”. The IT Department had also stated that the affairs of those ten entities were being looked after by one Amit Raja, a Chartered Accountant at Nagpur. The aforesaid e-mail address appears to
be that of Mr. Amit Raja.

• In case of following directors, in companies Ramji Agri Business Private Limited, Runiicha
Alloys & Steel Private Limited, Inco Infrastructures Private Limited, Simple Mining & Power
Private Limited and Krishnum Investments Private Limited, there appears to be a direct
connection of ten entities with the company and its promoters:
o The address of one director, Mr. Kamalkishore MultanMalji Bhattad, in his account
maintained with Central Depository Services (India) Limited (CDSL) is 101, Jai
Bhavani Society, Wardhman Nagar, Nagpur, which matches that of the company.
The email id provided is maloo@nagpur.dot.net.in, which is one of the email ids of
Mr. Maloo, the promoter of the company.
o The phone number provided by Mr. Kamalkishore MultanMalji Bhattad is that of Mr.
Bajranglal Bankatlal Maloo, C/o Nandlal Enterprises and the fax no. provided is that
of Mr. Nand Lal Maloo, both promoters of the company.
o The address in driving licence of another director, Mr. Lalit Lohia, is provided as ‘C/o
M/s. Murli Agro Products Limited’.
o The phone number provided by another director, Mr. Shivshakti Babulal Dhoot, in his CDSL account is that of the company
The ten entities, thus, appear to be related to the company and its promoters, for
the reasons stated above in this order.


11. In respect of the other observation of the IT Department that there was a
strategy with Mr. Sanjay Dangi to manipulate the share price of the company
before its FCCB issue, I note that the certified copy of the documents (pages 7
and 8) enclosed with the reference from the IT Department, as mentioned above
in this Order, were dated December 12, 2006 and January 31, 2007. Therefore,
SEBI ascertained whether the company had issued FCCBs around the above
period and if there was any attempt to manipulate the share price for the
purposes of influencing the FCCB issue. The pertinent points to check would be
Page 6 of 56
• Whether a spurt in price of and volume of trading in the shares of the
company was noticed in the build up to the FCCB
• What was the level of trading in and price of the share price prior to the
dates of ‘agreement’ as indicated in the reference of IT Department
• Did Dangi and/or promoter entities assist in manipulation of the share
price around the time of the FCCB – before and after?

At BSE, it emerges that in the early part of the examination period and prior to the
FCCB, there was an increase in trading activity in the shares of the company with
the Dangi group entities and the ten entities accounting for a substantial share of
the gross and net purchases, thus leading to an upward bias on the price. The
daily average volume was also doubled during the said period which was
accompanied by a price rise from `210/- to `1230/-. BSE had also observed that
the Dangi Group had influenced, supported and pushed up the price of the scrip,
probably to assist the FCCB issue. The majority of selling by the Dangi group
was mainly executed during May 2007 till June 2007 i.e. during the exit phase of
the alleged scheme of manipulation. Of the total 1,14,518 shares sold by the
Dangi Group to the ten entities, a quantity of 1,00,294 shares (approximately
87% of their selling) was in the May-June period. This substantiates the inference
that towards the latter part of the examination period, the Dangi group entities
exited at higher prices and the major counterparties to their sales were the ten
entities. This was apparently part of a quid pro quo arrangement with the
promoter controlled ten entities, since the FCCB had brought in funds at prices
which may not have been possible without the volume and price manipulation
allegedly done by the Dangi group.
19. The trading in the shares of the company at NSE had started only from
February 19, 2007 after the issuance of FCCB and after creating enough liquidity
at BSE so that the listing requirements at NSE were met. For the period till July
2007, the SEBI examination revealed that the Dangi Group entities and the ten
entities again dominated the trading as tabulated below separately for net buy
and net sell basis

It can be seen that the ten entities were the top buyers on net basis contributing
87.58% of the total net purchase at NSE. Further, the ten entities had contributed
50% of the total gross purchase of 5,40,830 shares in the market during the
period, by purchasing 2,65,092 shares. It is noted that the quantum of shares
purchased by the ten entities is significantly higher than that of any other
unconnected purchaser as seen from the quantities under net purchase column
of the table.
20. At NSE too, the Dangi Group entities were observed to be the top sellers
on net basis. They had sold 2,75,848 shares on net basis. The majority of the
shares sold by the Dangi Group were purchased by the ten entities. It is
pertinent to note that, out of 2,65,092 shares purchased by the ten entities,
2,57,538 shares were purchased from the Dangi Group. The same constituted
97% of the total purchases made by the ten entities.

28. Therefore from documents received from the IT department and other
sources, analysis of the trading data and the actual unfolding of the FCCB issue,
it prima facie appears that the FCCB issuance was done in the manner as
premeditated by the promoters of the company and the Dangi group. Thus, in
view of the above, the observations of the IT Department that there was a
strategy to manipulate the share price of the company before its FCCB issue,
prima facie appears to be founded


The said activities of the entities induced several hundred investors to deal in the scrip without any knowledge of a predetermined scheme of artificial creation of volume and increase in price orchestrated by the promoters and the Dangi group. Finally the Dangi group was given an exit from their holding of the shares of the company at a higher price by selling a majority of its holdings to the ten entities. The price of the shares fell sharply thereafter, thereby leaving unsuspecting investors with possible losses.
Finally, there may be prima facie a violation of the Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter
referred to as the PIT Regulations) as the said ten entities and the Dangi Group
(who could be termed as persons deemed to be connected with the
company/directors) were transacting on the basis of the information of the
impending FCCB issue by the company that was available only to them as part of
the game plan conceived by the promoters (few of the promoters were also
directors of the company).