On Tuesday, market regulator SEBI directed Trafiksol ITS Technologies to cancel its Rs 45 crore Initial Public Offering (IPO) and refund the money to investors, along with interest.
This decision came after reports of misleading information in the company’s prospectus and suspected involvement with a shell entity.
Concerns Raised Over Fraudulent Documents
Trafiksol ITS, a Noida-based company that provides intelligent transportation systems, faced trouble after its IPO was heavily oversubscribed.
In October, the BSE had postponed the listing of the company on its SME platform due to investor concerns.
SEBI found that Trafiksol had used fraudulent documents from a dubious third-party vendor (TPV) to justify spending Rs 17.7 crore on software purchases.
Investigations revealed that TPV was a shell company with fake financial records and no prior experience in software development.
Despite Trafiksol’s claims that it followed its procurement policy, it failed to explain why it chose this particular vendor.
Refund Process and SEBI’s Order
SEBI has instructed the BSE to oversee the refund process and ensure it is completed within a week. Additionally, Trafiksol ITS must take steps to cancel the shares that were transferred to investors’ demat accounts.
Company Background and IPO Subscription
Trafficsol ITS, based in Noida, offers intelligent transportation systems and automation solutions for traffic and toll management projects.
In October, the Bombay Stock Exchange (BSE) had postponed the listing of Trafficsol’s IPO on the SME platform due to investor concerns.
Despite this, the Rs 45 crore IPO received overwhelming interest, with subscriptions exceeding 345 times and bids totaling over Rs 10,000 crore.
