The Securities and Exchange Board of India (Sebi) has imposed a one-year ban on Trafiksol ITS Technologies and its promoters Jitendra Narayan Das and Poonam Das from accessing the securities market. According to reports from The Economic Times, the regulator has imposed a total penalty of ₹1.05 crore for alleged lapses in the company's initial public offering (IPO). The penalty structure includes ₹30 lakh on Trafiksol, ₹50 lakh on Jitendra Das, and ₹25 lakh on Poonam Das, with specific fines under various SEBI Act sections. As per The Economic Times, SEBI Whole-time member Amarjeet Singh noted that the present case did not result in any loss to IPO subscribers since due to regulatory intervention, the issue was ultimately cancelled and the subscription monies were refunded with interest. The regulator has directed all three entities to pay the penalties within 45 days.
The final order follows Sebi's investigation into Trafiksol's proposed ₹44.87 crore SME IPO, which was deferred in September 2024 after complaints raised concerns over the proposed use of proceeds. As reported by The Economic Times, the IPO included ₹17.70 crore earmarked for software procurement from Oasis Corpcare, which Sebi later described as a shell entity lacking the credentials to execute the software contract. The IPO was open between September 10 and September 12, 2024, and was subscribed 345.65 times at a price band of ₹66-70 per share. The listing was scheduled for September 17, 2024, but was deferred after complaints were received by Sebi and BSE. Following the complaints, BSE, in consultation with Sebi, deferred the listing of the company's shares. Subsequently, in an interim order passed in October 2024, the markets regulator directed BSE to ensure that the IPO proceeds were placed in an interest-bearing escrow account until further directions.
Sebi's investigation revealed that Trafiksol inflated its FY24 revenue by ₹22.01 crore through transactions involving Limco, Ishira, TP Central Odisha Distribution and TP Western Odisha Distribution. According to The Economic Times, the regulator identified ₹4.50 crore of fabricated journal entries made on March 31, 2024 relating to purported sales to these entities, which were used to inflate turnover. The company also made fictitious purchases worth ₹8.95 crore from Limco and Ishira, transactions that inflated reported purchases and trade receivables in addition to revenue. As reported by The Economic Times, Sebi found that about ₹13.4 crore of sales, including ₹4.50 crore of unbilled revenue and ₹8.9 crore of goods sales, inflated revenue and represented more than 20% of Trafiksol's FY24 revenue from operations of ₹65.81 crore. The regulator noted that the company acted substantially as an invoicing intermediary between Limco and Ishira, helping them record a larger sales and purchase footprint than the economic activity supported.
Sebi found that Trafiksol made false and misleading disclosures regarding its top customers and suppliers, including by obscuring the extent of its transactions with Limco and Ishira. As reported by The Economic Times, this information is crucial for investors as it helps assess how a company generates revenue and its dependence on particular counterparties. The final order held Jitendra Das directly responsible for key aspects of the misconduct, including the procurement of the fabricated quotation. According to The Economic Times, Sebi examined transactions with Limco Global Services and Ishira Global Service, finding a pattern of reciprocal purchase and sale transactions, direct shipment of goods, matching goods and quantities, concentration of transactions near the year-end and weak cash realisation. The regulator noted that the proposed ₹17.70 crore software purchase raised questions over the basis on which the expenditure was presented, demonstrating systematic misrepresentation throughout the company's financial and disclosure processes.
The violations extended beyond IPO disclosures, with Sebi finding that Trafiksol and Jitendra Das furnished false and misleading information while responding to summons issued during the investigation, violating provisions of the SEBI Act. According to The Economic Times, the regulator also found that the company relied on a fabricated quotation from Oasis Corpcare, which Sebi described as a shell entity without credible technical or operational capabilities. As reported by The Economic Times, Sebi's investigation found that the company's offer documents contained misleading financial disclosures and that the company did not produce work orders, milestone records or other documents to support the revenue of ₹4.50 crore recorded through journal entries. The regulator noted that Jitendra Das's statement during investigation that the entry was passed "to inflate the turnover" supported the finding of deliberate misrepresentation. In its 85-page order, Sebi found multiple and serious violations including issues relating to financial disclosures, issue-related expenditure and proposed deployment of IPO proceeds, with the regulator flagging the Oasis quotation as particularly serious violation. The regulator emphasized that "the conduct of the promoters, especially Jitendra Das, in relation to the Oasis quotation was particularly egregious" and that such conduct falls "severely short of the standards of diligence, integrity and responsible stewardship expected from the promoters of an issuer seeking to access public capital."
