Description

SEBI issued interim order freezing shareholding of promoters and restraining Varyaa Creations Limited from accessing securities market following irregularities in IPO process.

Summary

SEBI issued an interim order dated May 14, 2025 in the matter of Varyaa Creations Limited (VCL) following irregularities discovered during routine inspection of Inventure Merchant Banking Services Private Limited’s activities related to VCL’s SME IPO. The company raised INR 20.10 Crore through a fixed-price IPO and listed on BSE SME Platform on April 30, 2024. The order imposes severe restrictions on the company, its promoters, and the lead merchant banker.

Key Points

  • SEBI discovered irregularities in VCL’s IPO process during routine inspection of Lead Manager Inventure Merchant Banking Services Private Limited
  • SME IPO raised INR 20.10 Crore entirely through fresh issue of shares listed on BSE SME Platform on April 30, 2024
  • Interim order dated May 14, 2025 issued against 9 noticees including the company, 7 promoters/promoter entities, and the merchant banker
  • Shareholding of all 7 promoters/promoter entities (Pooja Vineet Naheta, Sarika Amit Naheta, Kusum Naheta, Jaineshaa Naheta, Pari Naheta, Vineet Naheta HUF, Amit Naheta HUF) frozen until further directions
  • Varyaa Creations Limited restrained from accessing securities market directly or indirectly
  • Inventure Merchant Banking prohibited from taking new merchant banking assignments
  • For pending assignments where Inventure is engaged as Lead Manager, issuers must appoint Monitoring Agency irrespective of issue size

Regulatory Changes

No new regulatory framework changes. This is an enforcement action under existing SEBI Act provisions (sub-sections 1 and 4 of section 11 and section 11B).

Compliance Requirements

  • Varyaa Creations Limited (Noticee 1): Complete ban from accessing securities market in any manner until further orders
  • Promoters (Noticees 3-9): All shareholding in VCL remains frozen until further SEBI directions
  • Inventure Merchant Banking (Noticee 2): Cannot accept any new merchant banking assignments until further directions
  • Issuers with pending Inventure assignments: Must appoint Monitoring Agency to monitor use of proceeds regardless of issue size

Important Dates

  • April 12, 2024: Prospectus filed
  • April 30, 2024: VCL listed on BSE SME Platform
  • May 14, 2025: SEBI interim order issued
  • Ongoing: Restrictions remain in effect until further SEBI directions

Impact Assessment

Company Impact: VCL faces complete market access ban, severely impacting its ability to raise capital or conduct securities transactions. The company raised funds for capital expenditure (INR 5.50 Cr for new showroom), inventory purchase (INR 10 Cr), general corporate purposes (INR 4 Cr), and issue expenses (INR 0.60 Cr).

Promoter Impact: Seven promoter entities have their shareholdings completely frozen, preventing any sale, transfer, or pledge of shares.

Merchant Banker Impact: Inventure faces significant business disruption as it cannot accept new merchant banking assignments. Its reputation in the industry is likely severely damaged.

Market Impact: Demonstrates SEBI’s stringent enforcement against IPO irregularities in the SME segment. Sends strong deterrent signal to other merchant bankers and SME issuers regarding compliance standards.

Investor Impact: Existing VCL shareholders face liquidity concerns and uncertainty. The case highlights risks in SME IPO investments and importance of due diligence on merchant banker credentials.

Impact Justification

SEBI enforcement action involving market access ban, frozen promoter holdings, and merchant banker restrictions following IPO irregularities in INR 20.10 Crore SME offering