SEBI Bars SME Firm DroneAcharya, Promoters For Up To Two Years; Slaps Rs 75 Lakh Penalty
Further, SEBI imposed a penalty of Rs 10 lakh each on DAIL, Instafin Financial Advisors LLP and Sandeep Ghate
SEBI on Friday barred DroneAcharya Aerial Innovations Ltd, its promoters and others from the securities market for up to two years, and levied fines totalling Rs 75 lakh for misutilisation of IPO proceeds and fraudulent corporate disclosures.
The regulator slapped a penalty of Rs 20 lakh each on Prateek Srivastava, promoter and managing director of DroneAcharya Aerial Innovations (DAIL), and promoter and CFO Nikita Srivastava.
Further, SEBI imposed a penalty of Rs 10 lakh each on DAIL, Instafin Financial Advisors LLP and Sandeep Ghate, while Micro Infratech Pvt Ltd was fined Rs 5 lakh.
DAIL came out with its initial public offer (IPO) and raised Rs 33.96 crore from the public. The equity shares were listed on the BSE SME platform on December 23, 2022.
In a 105-page order, SEBI said that after listing on BSE SME, the company and its promoters have fraudulently made misleading and false corporate announcements to induce interest to buy shares of DAIL to create demand for shares of the firm and also to maintain the otherwise falling price so that the pre-IPO investors could exit at a better price.
The regulator observed that they inflated revenues and profits and artificially maintained the price of the shares of DAIL, which enabled the pre-IPO investors to exit at a commensurate price, the chances for which, in the normal course, were bleak.
The market watchdog found that the IPO proceeds were misutilised and they had deviated from the objects clause of the IPO stated in the prospectus and had not taken the shareholders' approval for the deviation.
It also noted they have misrepresented the financial statements by including the income from Triconix and IRed, and hence inflated, leading to profit figures for FY 2023-24. "They have also failed to make disclosures w.r.t the quotation of software/ accessories in the prospectus, and made incorrect disclosures w.r.t the deviation of the IPO proceeds".
SEBI further stated that Instafin Financial Advisors LLP and Sandeep Ghate have actively aided and abetted the activity of DAIL, Prateek and Nikita. Micro Infratech Pvt Ltd was found to have provided inflated invoices to DroneAcharya, and has also aided them in misutilising the IPO proceeds, which also aided in misrepresenting their financials and carrying out this fraud.
Accordingly, SEBI restrained DroneAcharya Aerial Innovations, Prateek Srivastava, Nikita Srivastava, Instafin Financial Advisors LLP and Sandeep Ghate from accessing the securities market for two years, while Micro Infratech was barred for one year.
The order came after the Securities and Exchange Board of India (SEBI) conducted an investigation into the matter after finding reasonable grounds to believe that there was possible mis-utilisation of IPO proceeds, misrepresentation in financial statements, and diversion of funds by the management of DAIL.
The period of investigation was financial years (FY) 2022-23 and 2023-24.
