SEBI examines INR 20.30 crore IPO funds use in Nirman Agri Genetics case

This is an interim order by SEBI regarding Nirman Agri Genetics Limited (NAGL) and its director, Pranav Kailas Bagal, concerning prima facie findings of discrepancies and inconsistencies in the utilization of funds raised through the company's March 2023 IPO.

Who it concerns: Nirman Agri Genetics Limited (Noticee No. 1), Pranav Kailas Bagal (Noticee No. 2)

What SEBI found or ordered

• SEBI initiated examination into the utilization of INR 20.30 Crore raised via IPO in March 2023.
• SEBI observed major discrepancies between two sets of submissions by the Company regarding how IPO proceeds were used.
• SEBI found that INR 12.14 Crore was transferred to four entities (Janvi Traders, Lalit Traders, Somnath Agriculture Trading Co, and VN Enterprise) on the day of listing (March 28, 2023).
• NSE site visits revealed that the Mandi License for Janvi Traders was forged, and no such business entities existed at the registered addresses for Janvi Traders, Lalit Traders, Somnath Agriculture Trading Co, or VN Enterprise.
• Bank records showed large cash withdrawals (e.g., INR 5 Crore from Janvi Traders) and fund transfers to unrelated entities (e.g., Seashell Aqua Logistics, Visagar Financial Services) on the same day as the IPO fund transfers.
• CBDT data indicated that Janvi Traders and VN Enterprise had not filed Income Tax Returns despite large transactions.

Also in the document

• The order is interim, meaning final findings and penalties are yet to be determined.
• SEBI noted that the Company failed to provide agreements or invoices for the 'advances' paid to the four entities.
• The examination was triggered by a broader SEBI review of IPOs managed by First Overseas Capital Ltd (FOCL) following a prior order in the matter of Synoptics Technologies Limited.