Reg the genuineness of orderbook and faking of orders, one such example is Dronacharya. They did everything to fool investors and agencies. But eventually got caught. Below is the high-level findings of sebi .
- DroneAcharya overstated FY24 revenue by about ₹12.35 crore, mainly through Triconix and IRed, without any real delivery of goods or services.
- Several “customers” used for invoicing had residential or small-shop addresses, indicating orders were fictitious.
- Without these inflated sales, the company would have reported a pre-tax loss, not a profit, for FY24.
- IPO proceeds of ₹33.96 crore were diverted away from the stated utilisation plan in the prospectus.
- The deviation in IPO fund usage was done without shareholder approval and without proper disclosures.
- The company issued misleading corporate announcements about large orders, partnerships, and expansion plans that did not exist or were exaggerated.
- These announcements created artificial demand and supported elevated share prices, enabling certain pre-IPO investors to exit profitably.
- Related/connected entities were used to raise fabricated invoices, creating circular transactions to inflate revenue.
- Promoters and key officers failed to exercise any financial or governance controls, and SEBI noted active concealment of true financials.
- SEBI classified the conduct as fraud under PFUTP regulations and imposed ₹75 lakh total penalties along with market-access bans of up to 2 years on the company, promoters, and involved parties.
And the punitive actions taken by SEBI,
• DroneAcharya overstated FY24 revenue by about ₹12.35 crore, mainly through Triconix and IRed, without any real delivery of goods or services.
• Several “customers” used for invoicing had residential or small-shop addresses, indicating orders were fictitious.
• Without these inflated sales, the company would have reported a pre-tax loss, not a profit, for FY24.
• IPO proceeds of ₹33.96 crore were diverted away from the stated utilisation plan in the prospectus.
• The deviation in IPO fund usage was done without shareholder approval and without proper disclosures.
• The company issued misleading corporate announcements about large orders, partnerships, and expansion plans that did not exist or were exaggerated.
• These announcements created artificial demand and supported elevated share prices, enabling certain pre-IPO investors to exit profitably.
• Related/connected entities were used to raise fabricated invoices, creating circular transactions to inflate revenue.
• Promoters and key officers failed to exercise any financial or governance controls, and SEBI noted active concealment of true financials.
• SEBI classified the conduct as fraud under PFUTP regulations and imposed ₹75 lakh total penalties along with market-access bans of up to 2 years on the company, promoters, and involved parties.
Companies like OBSC and the likes with real business and factories and also a decent history at the parent or group level would not tend to do such misadventures. These could possible happen in new age companies with very less history of operations and usually happens in the catchy industry of the time. At present its in Drones, bess , data centre to name a few. Also watch out for businesses which keeps changing their names to the current trend with no real prior experience in that industry.