The Securities and Exchange Board of India (SEBI) on Friday banned Drone Acharya Aerial Innovations Limited (DAIL), its promoters and certain related persons from doing business in the securities market for two years. Also, a total fine of Rs 75 lakh was imposed on charges of misappropriation of IPO funds and false corporate disclosures. According to PTI news, Prateek Srivastava (promoter and MD) was fined ₹20 lakh, Nikita Srivastava (promoter and CFO) ₹20 lakh, DAIL, Instafin Financial Advisors LLP, Sandeep Ghate each fined ₹10 lakh and Micro Infratech Pvt Ltd was fined ₹5 lakh.
IPO and misuse of investors’ funds
DAIL issued an IPO of ₹33.96 crore and listed it on the BSE SME platform on 23 December 2022. SEBI’s 105-page investigation report found that after the listing, the company and its promoters made misleading and false corporate declarations to attract investors and artificially maintain the share price. Exaggerated revenues and profits. Used the funds raised in the IPO in a manner other than that stated in the prospectus, without obtaining shareholder approval.
Financial reporting errors
The company inflated profits in its financial statements by including income from Triconix and IRed. Provided incorrect or incomplete information in the prospectus regarding the description of the software and accessories. Correct information about diversion of IPO funds was not given to the shareholders.
Role of relevant institutions
Instafin Financial Advisors LLP and Sandeep Ghate facilitated the activities of DAIL and the promoters. Micro Infratech Pvt Ltd contributed to misappropriation of IPO funds and manipulation of financial data by giving inflated invoices. DAIL bans Prateek Srivastava, Nikita Srivastava, Instafin Financial Advisors LLP, Sandeep Ghate from the market for 2 years. Apart from this, a ban of 1 year has been imposed on Micro Infratech Private Limited. SEBI conducted a detailed investigation into the transactions undertaken by DAIL and the utilization of IPO funds during the financial years 2022-23 and 2023-24.
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