SEBI finds Trafiksol used shell entity to fabricate software quote

This is a final order by SEBI regarding the Initial Public Offer (IPO) of Trafiksol ITS Technologies Limited, focusing on findings that the company used a 'shell entity' to fabricate a quotation for a major software purchase, thereby misleading investors about the use of proceeds.

Who it concerns: Trafiksol ITS Technologies Limited, Mr. Jitendra Narayan Das, Ms. Poonam Das

What SEBI found or ordered

• SEBI found that the Third-Party Vendor (Oasis Corpcare Pvt. Ltd.) was a 'shell entity' lacking the capability to execute the software contract.
• SEBI directed Trafiksol to refund money paid by investors who were allotted shares and to cancel the issued shares.
• The IPO raised ₹44.87 crores, with ₹17.70 crores allocated for software purchase based on the fabricated quotation.
• SEBI found that the vendor's financial statements were signed by an auditor on the same day they were submitted to BSE, after the listing was halted.
• SEBI concluded that the company participated in a cover-up when the vendor's credentials were examined.

Also in the document

• The IPO was oversubscribed 345.65 times and priced at the upper end of the band (₹70 per share).
• SEBI noted that the vendor's office was found locked during a site visit by BSE.
• The Securities Appellate Tribunal (SAT) dismissed the company's appeal against the earlier order directing refunds.
• SEBI stated that the Managing Director was aware that the vendor's profile was fraudulent.