India’s markets regulator uncovers a web of inflated revenues, pre-IPO investor manipulation, and diverted IPO proceeds, barring DroneAcharya and its founders from the securities market for up to two years.
SEBI’s Action: A Stern Warning to Market Offenders
In a scathing indictment of DroneAcharya Aerial Innovations Ltd., the Securities and Exchange Board of India (SEBI) has imposed a total penalty of INR 75 Lakh on the company, its founders Prateek and Nikita Srivastava, and affiliated advisors. The regulator alleges systematic fraud, revenue manipulation, and misuse of IPO funds to lure public investors under false pretenses.
Beyond financial penalties, SEBI has also barred the accused from dealing in the securities market for up to two years and frozen assets to prevent further misuse during the ongoing investigation.
Fabricated Revenue, Fictitious Clients & Misleading Announcements
One of the most damning allegations in SEBI’s report is that nearly 35% of DroneAcharya’s FY24 revenue was fictitious, amounting to INR 12.35 Cr.
- Two clients, Triconix and IRed, were shown as major revenue contributors.
- SEBI found no evidence of deliveries, and customer addresses turned out to be residential homes and unrelated shops.
- Without these fake entries, DroneAcharya would have posted a loss of INR 3.91 Cr instead of a reported profit of INR 8.44 Cr.
These inflated figures were allegedly used to mislead investors during and after the IPO, with misleading corporate announcements designed to inflate share demand.
Misuse of IPO Funds: Gross Deviation from Disclosures
The company raised INR 33.96 Cr during its December 2022 IPO, with INR 27.99 Cr allocated for purchasing drones and related accessories. However:
- Only INR 70 Lakh was actually spent on drones.
- INR 27.28 Cr was routed into fixed deposits and various undisclosed accounts.
- No deviation disclosure was made to investors, in violation of listing obligations.
SEBI also flagged undisclosed related-party transactions with Awyam Synergies Pvt. Ltd., a company sharing directors with DroneAcharya. Over INR 10.8 Cr was transferred to Awyam, and INR 8.16 Cr returned later, suggesting circular movement of funds.
Pre-IPO Investor Manipulation & Obscene Profits
Between Feb–June 2022, DroneAcharya raised INR 32.35 Cr through Optionally Convertible Preference Shares (OCPS) from around 200 investors.
- Investors were allegedly promised high returns and a fast IPO listing.
- These OCPS were converted to equity just before the IPO.
- SEBI claims that these were pre-planned exits, with investors dumping shares after listing.
From Dec 2022 to Nov 2024, 168 pre-IPO investors sold 74.42 lakh shares, collectively earning INR 89.6 Cr, a 224.66% return.
In one case, the daughter of advisor Sandeep Ghate netted a 5,800%+ return, earning INR 6.1 Cr.
Lapses by Auditors, Advisors & Compliance Officers
SEBI did not stop at the founders. The investigation calls out institutional enablers:
- Auditor Kishan Verma issued clean reports despite blatant accounting violations.
- Merchant banker Corporate Capital Ventures failed to flag related-party transactions and inconsistencies in IPO filings.
- Compliance officers were found guilty of filing incorrect shareholding data and ignoring deviations in fund utilisation.
SEBI is now seeking detailed explanations from all involved and has indicated potential future penalties including disgorgement, permanent bans, and stricter regulatory action.
The Bigger Picture: Investor Protection at the Core
SEBI’s aggressive enforcement highlights the regulator’s increasing intolerance for IPO-stage fraud and post-listing malpractice. DroneAcharya’s case underscores how revenue fabrication, insider gains, and opaque fund use can severely harm retail investors.
With retail participation rising and SME listings gaining popularity, SEBI’s clampdown serves as a critical deterrent for companies and advisors considering similar shortcuts to market gains.
