The Securities and Exchange Board of India (SEBI) has taken stringent action against DroneAcharya Aerial Innovations Ltd and its promoters, following findings of alleged misuse of initial public offering (IPO) proceeds and misleading disclosures. The regulator has imposed a two-year ban on the company and its key individuals from accessing capital markets, marking a significant blow to the SME drone-services startup.
What SEBI Found — Misuse, Misrepresentation and Diversion
- SEBI’s investigation, covering the financial years 2022–23 and 2023–24, concluded that DroneAcharya had misused IPO funds raised in its December 2022 listing. Of the ₹33.96 crore raised, SEBI found that only a small fraction was actually spent on drones and accessories — with the bulk of funds diverted elsewhere, violating the stated IPO objectives.
- The regulator also determined that the company inflated revenues and profits by including fictitious sales — nearly 35% of FY24 revenue was reportedly fabricated via bogus dealings with companies that had no real delivery or business operations, used to mislead investors.
- Further, DroneAcharya and its promoters made a series of misleading corporate announcements aimed at artificially boosting share demand and share price — allegedly to enable pre-IPO investors to exit at favorable valuations.
The Penalty: Market Ban and ₹75 Lakh Fine
In its order, SEBI has:
- Banned DroneAcharya, its promoters (including Prateek Srivastava — managing director, and Nikita Srivastava — CFO/promoter) and associated advisers from buying, selling or dealing in securities for up to two years. NDTV Profit
- Imposed a fine totalling ₹75 lakh, with individual penalties of ₹20 lakh each on the two founders/promoters; additional fines on the company and advisors who allegedly aided the misconduct.
- Frozen the company’s assets and prohibited the disposal or encumbrance of shareholdings or other assets without SEBI permission.
SEBI’s action reflects serious regulatory concerns about corporate governance, transparency, and investor protection in SME-listed firms.
What This Means — For DroneAcharya, Investors & the Market
- For DroneAcharya: The two-year market ban severely limits the company’s ability to raise fresh capital, dilute investor confidence, and threatens its survival and long-term growth prospects.
- For public and retail investors: The case serves as a warning — even SME-listed startups can involve opaque accounting or misuse of IPO funds. Diligence and scrutiny are essential before investing.
- For the market: The action underscores the regulator’s increasing vigilance. It may also lead to tighter scrutiny of SME IPOs and greater emphasis on fund-utilization disclosures and corporate governance by small-cap firms.
- For fund-raising by SMEs/startups: The incident may make future investors more cautious, possibly increasing compliance burden and due-diligence expectations for smaller firms tapping public markets.
What to Watch Next
- Whether SEBI pursues further action beyond the ban — such as disgorgement of misused funds, recovery of diverted amounts, or criminal referrals.
- How DroneAcharya responds — via appeals or restructuring — and its plans for business survival during the ban period.
- Impact on other SMEs — whether the regulatory crackdown leads to stricter IPO norms or more conservative evaluations by investors.
- Broader investor sentiment — whether retail participation in SME IPOs declines due to heightened risk perception and regulatory oversight.
