Pre-IPO exits at manipulated prices: Why Sebi went after Ranbir Kapoor and Aamir Khan-backed company?

Droneacharya Aerial Innovations entered the market in December 2022 as one of the most talked-about SME listings of that year, helped by a headline-grabbing roster of early investors, including Bollywood actors Ranbir Kapoor and Aamir Khan, along with market veteran Shankar Sharma. The IPO, which was subscribed an extraordinary 244 times and rode on the excitement around India’s drone boom.

Two years later, Sebi has delivered a sharply different story. In a detailed order, the market regulator has barred Droneacharya, its promoters Prateek Srivastava and Nikita Srivastava, and several associated entities from the securities market for two years. The regulator found that the company diverted IPO proceeds, misrepresented financial statements, and used corporate announcements to artificially hold up share prices after listing.

Sebi says this helped pre-IPO investors exit at “manipulated prices” while public investors were left holding the risk.

Sebi noted that Droneacharya issued optionally convertible preference shares (OCPS) in private placements, raising about Rs 32.35 crore from pre-IPO investors. These investors were told the shares would be listed soon, which helped attract high-profile names. But at the time of this fundraising, the company was nearly dormant, had no meaningful operations, and reported negative profit before tax until FY21.

The company’s sudden revenue jump — from Rs 3.58 crore in FY22 to Rs 18.56 crore in FY23 and Rs 35.19 crore in FY24 — was not matched by healthy cash flows.

Sebi found that Droneacharya had negative operating cash flows for three straight years due to rising trade receivables and inter-corporate advances. Meanwhile, the only positive cash flow came from private placements and the IPO itself. According to the regulator, the company used IPO proceeds as working capital rather than generating sustainable cash from business operations.The regulator says Droneacharya issued misleading announcements, giving investors a favourable impression of business traction, which helped support the share price and provided an exit window for early investors.These pre-IPO shareholders were able to sell at elevated valuations that the regulator says were not justified by fundamentals. Retail investors who bought in the secondary market faced the downside once the hype dissolved. The order also highlights gaps in governance and transparency within the SME ecosystem, where listings can attract heavy retail interest despite limited disclosures and small operating histories.

While the penalties — Rs 75 lakh across entities and a two-year ban — are significant, the broader impact may be on investor trust. The case raises questions for retail buyers who often chase SME listings based on branding, media buzz, or celebrity association rather than a close examination of the company’s ability to generate sustainable profits and cash flows.