Market regulator SEBI has barred drone startup, DroneAcharya Aerial Innovations (DAIL), along with its promoters and key advisers, from accessing the securities market for up to two years.
The key persons who have been barred by the regulator include Prateek Srivastava, the MD of the company and Nikita Srivastava, the CFO. SEBI has also imposed monetary penalties totalling ₹75 lakh on six entities involved in the case.
DroneAcharya is an SME with a presence in drone operation training, drone supply, and maintenance services. The company got listed on the BSE SME platform in December 2022 after a stellar IPO.
The crackdown came after SEBI found that the company allegedly misused its IPO proceeds. The SEBI order says, “having reasonable ground to believe that there were possible mis-utilization of IPO proceeds, misrepresentation in financial statements, diversion of funds by management of DAIL to the detriment of investors in the Company,” the regulator conducted investigation in the matter.
The SEBI order alleged that the pre-IPO investors of DAIL were well aware about the listing prior to the issue of shares. The promoter/ directors deceived public investors with announcements of ‘non-binding’ or ‘trivial’ agreements to inflate revenue and profits.
The regulator went on to add that the DAIL promoters disclosed an invalid revenue figure from Triconix and used misleading orders to induce investors to buy DAIL shares.
This scheme, SEBI alleges, was reinforced by frequent operational announcements and use of popular personalities such as Mr. Aamir Khan, Mr. Ranbir Kapoor on their website. These celebrities had not given any permission to DAIL for using their images on website.
The regulator adds that such alleged malpractices continued even after the listing of DIAL, to maintain investor interest and enable pre-IPO investors to sell their share at profit. According to the regulator, the pattern of announcements and trading since April 1, 2024, indicates this alleged manipulative scheme was ongoing to enable the pre-IPO investors to sell their holdings.
SEBI has also accused DAIL of mis-representation of financial statements. It has alleged that the company recognised the revenue with respect to orders from Triconix and IRed without performing any services or delivering any goods or services.
This, SEBI says, is a complete violation of accounting standards, and the revenue accounted for and reflected in the financial statements was untrue and fictitious.
The market regulator has also accused DAIL of mis-utilising IPO proceeds. In its order SEBI alleged that DAIL raised Rs. 33.96 crores from its IPO, with Rs. 27.98 crores earmarked
for the purchase of drones and related accessories from four vendors.
However, the investigation revealed that DAIL spent only Rs. 0.70 crores on the purchase of drones, while the remaining Rs. 27.28 crores were utilised for purposes that were not stated in the prospectus. Therefore, SEBI says, it is alleged that DAIL and its promoter directors misappropriated Rs. 27.28 crores of the IPO proceeds.
