Blogger Red Flags Shocking Details about India Pesticides Ltd IPO
Moneylife Digital Team 29 June 2021
In January 2021, India Pesticides Ltd (IPL) issued 3,71,380 shares at Rs33.7 per share amounting to a total of about Rs1.25 crore to two individuals, Arun Kishanlal Bagaria and Madhu Arun Kumar Bagaria, who are relatives of one of IPL’s directors, Rahul Arun Bagaria. Rahul Bagaria was appointed as a director on the board of IPL in January 2021.
Just four months later, at an initial public offering (IPO) price of Rs295, the value of these shares has increased to about Rs10.96 crore reflecting a close to nine times returns for the individuals within a span of months. The individuals are directors of Bagaria & Co Pvt Ltd (BCPL), which was listed as an ‘Advisor to the Offer’ in IPL’s draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI).
However, IPL’s red herring prospectus (RHP), which was filed subsequently, dropped the mention of BCPL. Moneylife found that BCPL also serves as a statutory auditor of the fraud-hit Manpasand Beverages Ltd since October 2019, which has witnessed multiple auditor resignations in the past.
All glaring facts in the offer documents have been unearthed by an anonymous blogger and Twitter user who goes by the name, Leading Nowhere (@leading_nowhere) in a blog post and a Twitter thread.

The huge discount to the IPO price at which the shares were allotted to the Bagarias along with their conflicted relationship with IPL gives rise to the question if any quid pro quo was involved in this transaction. This also raises the question as to how IPL was able to successfully obtain valuation reports for the two transactions, despite the wide variation in IPL’s implied valuation in the two transactions. 
IPL underwent a high churn in its board of directors between October 2020 and February 2021. Kuruba Adeppa and Sanjay Khatau Asher joined the board of IPL as directors in December 2020 but soon resigned from their positions in February 2021.
Mr Asher is a lawyer specialising in securities law, corporate law, mergers and acquisition law and finance law and serves on the boards of several Indian corporates such as IndusInd Bank Ltd, Sudarshan Chemical Industries Ltd, Deepak Nitrite Ltd, and Ashok Leyland Ltd.
Mr Adeppa’s LinkedIn profile mentions that he is a vice-president at IPL. The departure of the two directors, especially that of Mr Asher, within 15 days of the approval of the allotment of preferential allotment serves as a key red flag.
IPL’s chief executive officer (CEO) and chief financial officer (CFO) cumulatively earn a remuneration of only Rs22 lakh per year, points out the blogger. For a company the size of IPL, such measly managerial compensation is highly unusual. IPL witnessed a high increase in working capital in FY20-21 due to which it was able to convert only 50% of its profit before taxes (PBT) into cash-flow from operations (CFO).
Also, about 45% of IPL’s receivables as of FY20-21 are over three month old. Low cash conversion into profits by IPL could point towards aggressive revenue recognition by the company.
IPL has leased its research and development (R&D) facility from group company, Swarup Chemicals Pvt Ltd, which is engaged in the production of similar products as IPL.
The anonymous blogger has highlighted other red flags such as the company’s involvement in litigations regarding misbranding of its products, dispute regarding its trademark, payment of Rs1.2 crore each in professional fees to family members and an extremely low spend on R&D by the company.
3 months ago
Even after so much comments why sebi is not investigating these and put everything into the right perspective whether true or false or they are aware and keeping quiet.
I think it may be better who so ever had applied and had got the shares to sell and get out before something big news about the company comes in when the share value will become a penny stock
4 months ago
Wish this had been brought to light before IPO
4 months ago
Such frauds are being promoted with active connivance of government agencies and political operatives.(Drliberately mentioned as operatives as they are not politicians but criminals in political colours)
4 months ago
Thanks for highlighting facts
4 months ago
Thanks for highlighting facts
4 months ago
It will be interesting to see if Mrs. Madhu and Mr. Arun Kumar Bagaria cash out their holding after listing of IPL and make a neat profit of Rs.9.71 crores (assuming listing at issue price) on an initial investment of only Rs.1.25 crores in less than six months. It will also be interesting to see if SEBI takes any action in the nature of disgorging of such illegal profits. How was company allowed to issue shares to these 2 individuals at valuation a tenth of what was discovered less than six months later?
4 months ago
SEBI was formed to check these kind of issues but looks like they do not have competance with them
to deal with these kind of news when it is publicly available either sebi was sleeping or they are aware and turn a blind eye towards it.Wake up sebi -Your basic duty is check fraud and ensure the companies do not cheat investors and do not allow the promoters to make a fast buck and run away.
4 months ago
if this is a fact than sebi is here only to loot small investors with connivance of MCA who is least interested in protecting small investors.
4 months ago
Thank God, I did not subscribed to the IPO.! Actually, Money Life Magazine had covered this company.
Will it help if the authorities inspect at least two years transactions before and after IPO ?
Replied to ar.ravijoshi comment 4 months ago
Does money life asked not to subscribe this IPO?
4 months ago
Why is such shocking news published after IPO closure date?
Do big operators wish to buy at lesser price on listing and sell after a price rise?
This will make retail investors loose their money.
Was not SEBI aware of such situation?
Kamal Garg
4 months ago
Surprising and shocking to learn about such glaring lapses on the part of the company and corporate governance issues and how SEBI, as always, has been caught completely napping, once again.
4 months ago
It is surprising how SEBI /RBI who are supposed to have set standards are not looking at such loop holes and taking them to task and should not allow them to list
4 months ago
Brilliant eye opener!
Vivek Shah
4 months ago
We are back to the scam filled heady days of 1980s when people closed their eyes and invested in shady companies.
Replied to Vivek Shah comment 3 months ago
SEBI looks like has not yet woken up either they should enquire about it and quash the discussion saying it is false or if there is any substance in it take necessary action on all involved before the matter takes an ugly turn before it takes an ugly turn.Wake up sebi
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