Kore Digital Promoters Barred by SEBI Over Alleged INR 541 Crore Revenue Misstatement

Kore Digital Ltd, its managing director Ravindra Doshi, and two of his key managers, Chaitanya and Kashmira Doshi, have all been prohibited by the Securities and Exchange Board of India (SEBI), the market regulator in India. Primarily, they were all found guilty of accounting fraud, financial statement deception, diverting funds from a preferential issuance, and providing investors with incorrect information.

Additionally, the regulator has chosen to have a forensic auditor review Kore Digital's financial records beginning with the company's debut on June 14, 2023, and continuing until March 31, 2026. On 18 September, after SEBI's move, Kore Digital's stock dropped 10%, reaching a 52-week low of INR 78.75 on the National Stock Exchange (NSE).

Findings of SEBI Against Kore Digital Ltd

According to an ex parte ruling issued by SEBI whole-time member Kamlesh Chandra Varshney, the company's financial statements have been consistently misrepresented. Beyond that, he said that Kore Digital was keeping fraudulent bank records and that SEBI was receiving forged paperwork. Further to that point, Varshney stated that Kore Digital stockholders do not benefit from auditors, directors, or the mutualisation of preferential issue profits.

Accordingly, appropriate interim directives should be issued regarding the subject, stated Varshney. From 1 April 2023 to 31 March 2026, SEBI examined the matter. The regulator also took note of Kore Digital's dramatically increased operational revenue after its offering, which is when it all started. SEBI reports that, on average, a company's consolidated revenue was roughly 75% from its subsidiaries and about 25% from its standalone operations.

Compared to FY22–23, when it was INR 21.27 crore, FY25–26 saw a rise of INR 408 crore, according to the executive order. Much of the consolidated revenue came from three subsidiaries: Franken Telecom Pvt Ltd, Wolter Infratech Pvt Ltd, and KDL Realinfra Pvt Ltd. These subsidiaries and their step-down subsidiaries were found to have generated revenue that was clearly not legitimate, according to SEBI. In the fiscal years of 24–25 and 25–26, it claimed that Kore Digital had overstated its revenue by INR 541.30 crore, or about 73% of its entire sales.

Action Taken by SEBI Against Kore Digital Ltd

According to SEBI's directive, Kore Digital must disclose all material facts in its financial statements. These disclosures include information on linked parties and transactions, as well as any other information that is necessary to comply with the LODR Regulations. It has been decided that Kore Digital, Ravindra Doshi, Chaitanya Doshi, and Kashmira Doshi cannot issue a prospectus, offer document, or public advertisement that solicits funds from the public in order to access the securities market.

Until further orders, Ravindra, Chaitanya, and Kashmira Doshi are also prohibited from directly or indirectly dealing in Kore Digital's securities by purchasing, selling, or otherwise dealing in them. All noticees are hereby instructed by SEBI to assist the investigative authority by furnishing the requested documentation and explanations. Until Kore Digital receives SEBI approval, NSE is also instructed not to permit its migration from NSE Emerge to the main board.

Kore Digital's financial records will be audited by a forensic auditor appointed by the regulator between the date of listing and March 31, 2026. Bose & Chakraborty, CA Nikhil Gupta, and JN Gupta & Co have been ordered by SEBI to be investigated by the National Financial Reporting Authority (NFRA). These directives are just temporary and will be in effect until new instructions are issued. A further examination is necessary, as SEBI made clear that its conclusions are preliminary.