Description

SEBI order under Sections 11(1), 11(4), 11B(1) and 11B(2) against Droneacharya Aerial Innovations Limited and 9 other noticees for fraudulent scheme, misrepresentation of financial statements, misutilization of IPO proceeds, and non-disclosure violations.

Summary

SEBI has issued an order under Sections 11(1), 11(4), 11B(1) and 11B(2) of the SEBI Act, 1992 against Droneacharya Aerial Innovations Limited (listed on BSE SME platform since December 23, 2022) and 9 other noticees including promoters, directors, and corporate entities. The investigation revealed fraudulent schemes, misrepresentation of financial statements, misutilization of IPO proceeds, non-disclosure of related party transactions, incorrect shareholding disclosures, and violations of PFUTP Regulations and LODR Regulations.

Key Points

  • SEBI conducted investigation into possible misutilization of IPO proceeds and misrepresentation in financial statements by Droneacharya Aerial Innovations Limited
  • 10 noticees involved: DAIL, Mr. Prateek Srivastava (Promoter/MD), Ms. Nikita Srivastava (Promoter/Director/CFO), Instafin Financial Advisors LLP, Mr. Sandeep Ghate, Mr. Kishan R Verma, Mr. Harshal Kher, Corporate Capital Ventures Private Ltd., Micro Infratech Pvt. Ltd., and Ms. Mukula Joshi
  • Violations include fraudulent scheme, misrepresentation of financial statements, misutilization of IPO proceeds, non-disclosure of software quotation in prospectus, incorrect disclosure about deviation in IPO proceeds utilization, non-disclosure of related party transactions, and incorrect shareholding disclosures
  • Company listed on BSE SME platform on December 23, 2022
  • Main operations: drone operation training, drone supply and maintenance services, and management consultancy and training services
  • Instafin Financial Advisors LLP acted as corporate advisor, with Mr. Sandeep Ghate and Ms. Damini Ghate as partners

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing SEBI Act provisions, PFUTP Regulations, and LODR Regulations.

Compliance Requirements

  • Show Cause Notice issued to all 10 noticees
  • Noticees required to submit replies and appear for personal hearings
  • Investigation examined corporate announcements, financial statements, IPO utilization reports, related party transactions, and shareholding disclosures
  • Inquiry proceedings initiated under SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Important Dates

  • December 23, 2022: Droneacharya Aerial Innovations Limited listed on BSE SME platform
  • April 25, 2017: Instafin Financial Advisors LLP incorporated
  • Investigation period: Covers IPO process and post-listing period

Impact Assessment

Market Impact: High - enforcement action against BSE SME listed company affects investor confidence in SME segment and highlights regulatory scrutiny of IPO proceeds utilization

Investor Impact: High - fraudulent scheme and misrepresentation of financial statements directly harms investors who participated in IPO and secondary market transactions

Regulatory Impact: Significant enforcement action demonstrating SEBI’s oversight of SME listings, IPO compliance, and post-listing disclosure obligations

Company Impact: Severe - multiple violations including fraud, misutilization of IPO funds, and non-disclosures may result in penalties, sanctions, and reputational damage to the company and associated entities

Impact Justification

Major enforcement action involving fraudulent scheme, IPO proceeds misutilization, financial statement misrepresentation, and multiple regulatory violations affecting listed company and investors