Trafiksol IPO: SEBI Orders Detailed Investigation, Halts Listing till Further Orders
Moneylife Digital Team 18 October 2024
Market regulator Securities and Exchange Board of India (SEBI) has ordered a detailed and time-bound examination of the disclosures made by Trafiksol ITS Technologies Ltd (Trafiksol) in its draft red herring prospectus (DRHP) filed with the Bombay Stock Exchange (BSE) on 30 May 2024, including other issues. SEBI also directed BSE not to proceed with the listing of Trafiksol shares. 
 
In an order last week, Ashwani Bhatia, whole-time member (WTM) of SEBI says, "BSE shall take appropriate steps to ensure that the proceeds from the initial public offering (IPO) of Trafiksol are placed in an interest-bearing escrow account, and no access to these funds shall be granted to Trafiksol or its affiliates until further orders. The investigation shall be completed within 30 days from the date of this order.” 
 
Last month, BSE decided to halt listing Trafiksol shares, citing some unresolved queries. The Rs44.87 crore IPO of TrafikSol on the small and medium enterprise (SME) platform received nearly 350 times subscriptions or bids worth around Rs19,380 crore. 
 
In a release, BSE says, "...in view of certain queries that have been raised, the listing for trading of the (TrafikSol) scrip is postponed till queries are resolved by the issuer." (Read: TrafikSol Listing Halted by BSE amid Investor Concerns, SEBI Nudge)
 
Noida, Uttar Pradesh-based TrafikSol was scheduled for a listing on 17 September 2024 on BSE in the list of 'MT' group of securities. However, several investors have raised concerns about the company's fundamentals, balance sheet, auditors' resignations and use of proceeds from the IPO.
 
Consequent to the postponement of the listing, SEBI started receiving complaints from investors who had been allotted shares in the IPO. The investors primarily requested the cancellation of the IPO and refund of their investments.
 
Separately, the market regulator, also called Ekadrisht Capital Pvt Ltd, the sole book-running lead manager to the TrafikSol issue, to clarify issues raised in complaints it received. However, Ekadrisht Capital was not able to provide satisfactory responses, SEBI says.
 
Several investors raised concerns about TrafikSol's purchase of software for Rs17.70 crore from Oasis Corpcare Pvt Ltd which has a paid-up capital of just Rs1 lakh and has not filed any reports since 2021.  
 
In its investigation, BSE found that the financial statements of Oasis Corpcare for the past three years were signed by Murmuria & Associates on 2 September 2024, a week before the opening of the IPO of TrafikSol. During its site inspection, BSE found that the office of Oasis Corpcare was closed and that no one was available at the company address. 
 
SEBI also observed that the audited financials did not have a unique document identification number (UDIN) which is mandatory for financial documents and certificates attested by practising chartered accountants (CAs). 
 
Oasis Corpcare obtained registration for goods and services tax (GST) only on 5 January 2024 and mentioned its nature of business as a trade-retailer and retail business. "It, therefore, prima facie, appears that the third-party vendor is not a software developer," SEBI says.
 
While proposing to shelve the procurement of software from Oasis Corpcare as stated in the DRHP, TrafilSol informed BSE that it would call for fresh proposals from vendors and award the contract only after obtaining the consent of shareholders. 
 
Mr Bhatia, the WTM of SEBI, says, "...it cannot be ruled out at this stage that the attempt to award the software contract to a vendor, who prima facie appears to be a shell entity without any prior experience in developing a software platform of the nature disclosed by TrafikSol in its DRHP, was an attempt to deliberately mislead investors and divert the IPO proceeds."
 
He also noted that investments made by the individuals and entities who have been allotted shares in the IPO are in limbo or at risk and the listing of these shares will provide immediate liquidity to such investors.
 
However, the WTM says, "...if such IPOs are allowed to list, even in the wake of such serious concerns, it can shake the confidence of the investors in the listed SME ecosystem."
Comments
pkdjeengar123
5 months ago
Sebi apni manmani kr rha he na to listing hone de rha ,na money refund kr rha he, na investigation kr rha he ,na koi update de rha he. Bs time west kr rahe he isliye pahle hi bol rkha he money ko eskrow account me rkho ye sab poor invester ke liye dhokha he
rajnanda1212
6 months ago
almost 2 month passed still there is no clarification on this please refund the money as soon as possible to enable us in such situation, sebi should give refund order t company , hard earn money stuck in such comapny
vaghela.vipul.3798
6 months ago
30 days is completed when will I received return my money???
pkdjeengar123
Replied to vaghela.vipul.3798 comment 6 months ago
Sebi 30 days means 365 days
pkdjeengar123
6 months ago
?? ?? ?? ????? ?? ???? ??? ??? ??? ?? ???? ????? ???????? ?? ???? ???? ???? ?? ??? ?? ???? ???? ???? ?? ?????? ????? ?? ?????? ?? ?? ???? ??? ???
pkdjeengar123
Replied to pkdjeengar123 comment 6 months ago
Bhai inka 30 din pura kb hoga kisi ko pta ho to btaye
arup.srkr1
6 months ago
Why SEBI is allowing such fraudulent company for floating IPO. These organisations will create a huge negetive impact on FDI. Why for such fraudulent company the investor will suffer. SEBI must make sure the allotee must get their money back immediately. I have written to SEBI with all my details but not getting back my money
pkdjeengar123
Replied to arup.srkr1 comment 6 months ago
Any news about one sevi one month completion when will sebi 30 day end of investigation
sonivishal2004
7 months ago
Money has to be refunded to investors as now whole scenario and sentiments have been changed. Now if this company gets listed then will feel like that we are cheated not only by company but by leading manager as well as bse also.

It is more than 1 month money is blocked so please process our refund on priority basis

Thanks
piyushjain11603
7 months ago
Please refund money immediately as almost 1 month my fund blocked need money...all small investors r stuck..sebi must order to refund money with interest
dr.satishpatel76
7 months ago
Please refund money immediately as almost 1 month my fund blocked need money...all small investors r stuck..sebi must order to refund money with interest
vishalksingh55
7 months ago
Please cancel the allotment and refund the money to alloties
chandrasekhar67
7 months ago
We beg SEBI to cancel this IPO and refund the money to allottees. This act of SEBI will encourage retail investors confidance
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