Market regulator Securities and Exchange Board of India (SEBI) imposed penalties totalling Rs 51 lakh on 18 entities, including individuals, for misutilisation of IPO funds and certain other lapses with respect to the shares of Acropetal Technologies Ltd (ATL).
ATL raised Rs 170 crore through an initial public offering (IPO) in February 2011. SEBI started a preliminary investigation into the company's IPO in February 2012 and later an extensive probe was conducted to ascertain whether there were any violations of regulations.
The probe, which included several entities, revealed a prima facie non-utilisation of IPO proceeds, deviation from the objects of the issue, wrong disclosures made to NSE and BSE regarding the proceeds' utilisation and non-disclosure of material information, among others. The investigation was concluded and the action was approved by the competent authority on 27 March 2017.
On 10 March 2011 (immediately after receipt of IPO proceeds), an amount of Rs.20.59 crore approximately was utilized to repay ATL bridge loan with United Bank of India (A/c Number 0884050108584). In this regard, ATL at the time of investigation had stated that said amount of Rs.20.59 crore approximately was transferred on 10 March 2011 for term loan repayment.
ATL provided wrong disclosure in the prospectus with respect to the utilisation of bridge loan, and did not disclose the related party transactions with Equastone Properties Pvt Ltd (a related entity of ATL).
Due to diversion of IPO proceeds and wrong disclosures/non-disclosure made in the prospectus. Noticees are/were, inter alia, undergoing periods of restraint from accessing the securities market. The diversion of IPO proceeds took place in 2011 and more than 11 years have lapsed since the impugned IPO.
According to a 136-page order, SEBI said that ATL, its chairman and managing director Ravi Kumar Doraiswamy are liable for imposition of penalties totalling Rs 15 lakh.
Further, the company has been slapped with a separate fine of Rs 2 lakh for providing wrong quarterly disclosures to NSE and BSE regarding utilisation of IPO proceeds.
Eleven entities have been slapped with a fine of Rs 2 lakh each for "acting hand-in glove with ATL and were party to the actions and deeds of ATL to divert the IPO money and not deploying the IPO proceeds for stated objects of issue as disclosed in the prospectus of ATL".
As per the order, three other individuals have to pay a fine of Rs 2 lakh each besides, a penalty of Rs 1 lakh each on two other individuals. According to SEBI, additional penalties are being imposed on four entities to the tune of Rs 1 lakh.