- SEBI alleges Dhenu Buildcon used circular fund routing to show Rs 1,000 crore in fake loans
- Rs 840 crore of these loans were converted into shares, giving lenders 99.7% company control
- SEBI found common directors, addresses, and limited genuine business in linked entities
SEBI has alleged a complex fund-routing arrangement involving Dhenu Buildcon Infra Ltd in which an initial pool of money was repeatedly recycled through a network of companies, creating the appearance of Rs. 1,000 crore of fresh loans before about Rs. 840 crore was converted into shares. The regulator has described the network as a "closed, self-sustaining financial network" in an interim, ex-parte order dated Aug. 19.
The order does not constitute a final finding of fraud. SEBI says its conclusions are prima facie and that further investigation is required.
The sequence began in September 2024, months before Dhenu reported receiving the purported loans. WhatsApp messages examined by SEBI show discussions involving Dhenu, bank accounts and a future preferential allotment. One message referred to arrangements for "pref". In October, another conversation referred to accounting entries and the need to "rotate funds".
By November, SEBI says the messages showed discussions about loan agreements, stamp papers, KYC and bank verification. One conversation concerned ensuring that a person was present at Dhenu's premises for physical verification and installing a company name board.
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On Dec. 21, 2024, Dhenu increased its borrowing limit to Rs.1,000 crore. Between Dec. 24 and 31, the company then received Rs. 1,000 crore through 46 transactions, purportedly from seven lenders.
SEBI traced those transactions backwards and identified 28 different routing patterns. In one example, about Rs. 25 crore moved through several entities before reaching Dhenu. The regulator says this initial pool was then repeatedly routed through companies in the network and returned to Dhenu as purported loans from different entities.
The regulator's banking analysis found that Dhenu's maximum bank balance during this period was only about Rs. 25.81 crore, despite the company supposedly receiving Rs. 1,000 crore. At the same time, about Rs. 996.1 crore flowed out of Dhenu to five entities, including Genesis Developers & Holdings, Hillridge Investments, Abhijit Trading and Intellectual Builders.
SEBI says this was not simply a case of money moving between companies. It found common directors, authorised signatories, addresses, bank branches and extensive communications linking the entities. Several companies also appeared to have little or no genuine business activity.
Site visits added to the regulator's concerns. At Dhenu's registered office, SEBI found limited activity and no senior management presence. Several purported lenders had no identifiable operations at their registered addresses. Some premises were residential or occupied by unrelated businesses.
The financial profiles of the lenders also raised questions. Tiaan, for instance, reported revenue of only a few lakhs in the relevant years while purportedly lending Rs. 160 crore. Other entities similarly had financial profiles that SEBI considered disproportionate to the amounts they allegedly advanced.
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The next stage came in July 2025, when Dhenu proposed converting about Rs. 840 crore of the purported loans into equity. On Dec. 27, 2025, it allotted 5,91,54,92,940 shares to six entities at Rs. 1.42 each.
The allotment transformed the lenders into owners of almost the entire company. Collectively, they received 99.70% of Dhenu's diluted equity.
SEBI's case is that the loan transactions and preferential allotment cannot be viewed separately. Its prima facie theory is that the alleged circular funding first created an artificial liability and that liability was then converted into shares, giving the network effective control of the listed company.
The shares began trading in February 2026. Their lock-in expired on Aug. 15, 2026. Two days later, the allottees began selling. SEBI identified sales of 17,444 shares for about Rs. 1.34 lakh on Aug. 17 and 18.
The regulator intervened on Aug. 19 because it says the six entities collectively held shares worth about Rs. 5,667 crore, based on the relevant VWAP. That is not money already made. SEBI says it represents the potential value of the block and the potential wrongful gain if the shares were sold at prevailing prices.
SEBI has therefore restrained the six allottees from disposing of their Dhenu shares. Surendra Jain and Virendra Jain have been barred from buying, selling or dealing in securities or associating with the securities market. Dhenu has also been restricted from undertaking specified corporate actions.
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But the order leaves important questions unanswered. SEBI has not identified the ultimate original source of the initial Rs. 25 crore. It has not finally established the precise role of every company or individual, nor determined the final amount of any wrongful gain.
It says further investigation is needed into the lenders, intermediary companies, auditors and professionals, the preferential allotment, trading activity and possible violations under other securities regulations.
Most importantly, SEBI has not said that Rs. 5,667 crore has already been siphoned off or earned. The identified realised sales amount to about Rs. 1.34 lakh.
The interim order's core allegation is narrower and more specific: a network allegedly used circular fund flows to create the appearance of Rs. 1,000 crore of genuine borrowing, converted about Rs. 840 crore into equity and ended up with 99.7% of a listed company. The regulator says the evidence, taken together, warrants immediate restraint while that alleged scheme is investigated further.
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