SEBI: Orders to investigate TrafikSol’s IPO revelations
New Delhi| The Securities and Exchange Board of India (SEBI) on Friday banned SME company TrafikSol ITS Technologies Ltd. Decided to conduct a detailed investigation into the revelations made in the IPO documents. Also, BSE was directed not to proceed towards listing the shares of the company. SEBI investigation will be completed within 30 days.
The market regulator, in its interim order, asked BSE to ensure that the proceeds from the IPO are kept in an interest-bearing special account. This amount should not be given to TrafikSol or its associates until further notice.
BSE had postponed the listing of TrafikSol ITS Technologies on its SME platform following investor concerns. SEBI’s decision has come after about a month. A complaint was received against the company that it allegedly wanted to embezzle the IPO proceeds through fake companies by making false claims. The Rs 45 crore IPO of TrafikSol ITS Technologies was more than 345 times subscribed, attracting bids of over Rs 10000 crore. Priced at Rs 66 to Rs 70 per share, the issue was open for subscription from September 10 to 12.
The company raised funds with plans to use the funds for software purchases, repayment of borrowings, working capital, and general corporate purposes. Following the closure of the issue and allotment of shares, SEBI and BSE received some complaints regarding discrepancies in TrafikSol’s IPO. It was alleged that the third-party vendor chosen by TrafikSol was unable to fulfill the contract.
The investigation found that the seller had not filed financial statements in three years and had reported zero revenue in the previous year for which the financial statements were filed. As per the order, prima facie it was found that the seller was a retail trader and not a software developer. Further investigation revealed irregularities such as missing financial document identification numbers and non-operational office of the vendor.
