Sebi Imposes Two-Year Ban on DroneAcharya and Promoters with Rs 75 Lakh Penalty for IPO Misuse

The Securities and Exchange Board of India (Sebi) has taken action against DroneAcharya Aerial Innovations Ltd and its key figures. They are barred from the securities market for up to two years. This decision follows allegations of misusing IPO funds and making false corporate disclosures. Sebi imposed fines totalling Rs 75 lakh on various parties involved.

DroneAcharya Aerial Innovations Ltd raised Rs 33.96 crore through an initial public offering (IPO). The company's shares were listed on the BSE SME platform on December 23, 2022. Sebi's investigation revealed that after listing, the company and its promoters made misleading announcements to boost share demand artificially.

Fraudulent Activities Uncovered

Sebi's findings indicated that the company inflated its revenues and profits. This manipulation was aimed at maintaining share prices, allowing pre-IPO investors to exit at favourable rates. The regulator noted that such outcomes would have been unlikely under normal circumstances.

The investigation also highlighted deviations from the IPO's stated objectives without shareholder approval. Additionally, financial statements were misrepresented by including income from Triconix and IRed, leading to inflated profit figures for FY 2023-24.

Penalties and Market Restrictions

Sebi imposed a Rs 20 lakh penalty each on Prateek Srivastava, DroneAcharya's promoter and managing director, and Nikita Srivastava, the promoter and CFO. DAIL, Instafin Financial Advisors LLP, and Sandeep Ghate faced Rs 10 lakh fines each, while Micro Infratech Pvt Ltd was fined Rs 5 lakh.

Micro Infratech Pvt Ltd was found to have issued inflated invoices to DroneAcharya. This action contributed to the misuse of IPO proceeds and misrepresentation of financials. Consequently, Micro Infratech is barred from the securities market for one year.

Role of Instafin Financial Advisors LLP

Sebi's order also identified Instafin Financial Advisors LLP and Sandeep Ghate as active participants in aiding DAIL's fraudulent activities. Their involvement included assisting in the misutilisation of IPO funds and misrepresentation of financial statements.

The investigation covered financial years FY 2022-23 and 2023-24. Sebi found reasonable grounds to believe there was misuse of IPO proceeds, financial misrepresentation, and fund diversion by DAIL's management.

This regulatory action underscores Sebi's commitment to maintaining market integrity. By imposing penalties and market access restrictions, Sebi aims to deter similar misconduct in the future.

With inputs from PTI