SEBI barred Nirman Agri Genetics for diverting nearly 93% of IPO funds.
The firm’s shares hit a 5% lower circuit following the regulatory action.
SEBI found fictitious entities and false invoices in fund utilisation records.
The company’s promoter was restrained from trading, pending further investigation.
A day after the Securities and Exchange Board of India (SEBI) barred SME-listed Nirman Agri Genetics Ltd (NAGL) from accessing the securities market on alleged grounds of diversion of IPO funds, shares of the firm hit 5% lower circuit on Wednesday.
The regulatory board has also asked the company to halt all proposed corporate actions — including a bonus issue, stock split, and a name change to Agriicare Life Corp Ltd — until further orders.
On Tuesday, the shares of Nirman Agri were trading 5% lower at Rs 166.85 apiece. The 52-week low of the stock is Rs 130 and 52-week high is Rs 456 and the market capitalisation of the stock is Rs 133 crore, as per a MoneyControl report.
However, in an interim order passed on Tuesday, SEBI Whole-Time Member Kamlesh Chandra Varshney restrained the company’s promoter Pranav Kailas Bagal from buying, selling, or dealing in NAGL shares, directly or indirectly, till further directives.
An investigation by SEBI found that the firm had mis-utilised about Rs 18.89 crore or 93% of the total IPO proceeds of Rs 20.30 crore by transferring funds to entities that were either fictitious, suspect in nature or controlled by Bagal and his relatives. Additionally, the regulator noted that NAGL submitted conflicting information regarding fund utilisation without any credible explanation regarding the discrepancies.
“The Company has failed to furnish any credible proof of any agreement or invoices backing the transactions between the Company and the said parties. To top it all, in case of three entities to whom the Company claims to have made payment, the bank accounts where the payments were credited were found to be belonging to entirely different parties,” the order stated.
Further, SEBI said that NAGL claimed to have paid Rs 12.14 crore to four vendor entities who had suspect credentials. The firm also failed to provide valid agreements or invoices to substantiate the payments. In some instances, the bank accounts receiving funds belonged to entirely unrelated parties.
In addition to the SEBI investigation, site visits by NSE revealed that the entities were non-existent at the given addresses and no agricultural activities were found as opposed to the claims made by NAGL.
