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Startup claims 'go-between' firm for IPO siphoned off funds

The Jaipur-based company had raised Rs 4.54 crore through a public issue in August 2020

Mumbai / May 24, 2022 / 08:21 PM IST

In a stunning, if not, bizarre case of lack of financial know-how and market fraud, BSE-listed startup has alleged that a firm, acting as a go-between itself and its investment banker during its initial public offering (IPO) has run away with a large chunk of the proceeds of the issue.

In an April 13 exchange filing, told BSE that the major portion of proceeds raised through an IPO by the company had been misappropriated by GYR Capital Advisors (formerly Alpha Numero Services).

As per's complaint to Securities and Exchange Board of India (SEBI), GYR Capital Advisors was a consultant and intermediate between Fast Track Finsec and the company.

The Jaipur-based company had raised Rs 4.54 crore through a public issue in August 2020. The company is a new-age digital startup involved in intercity cab rental services.

“The company has initiated action against them for defrauding the company with the intention of siphoning the proceeds of the IPO, as aptly mentioned in our complaint attached below,” said.

Trekkingtoes has filed a complaint with SEBI against Fast Track Finsec (merchant banker), whose former director Abhishek Vijay Kumar Sharma is a director at Alpha Numero (now known as GYR Capital), Rohit Pareek, and Mohit Baid, director of Alpha Numero, and three others.

"Without any ground or supporting documents they have taken our name in the public domain for which we will take necessary legal actions against in the due course," a spokesperson for GYR Capital Advisors said in an email statement. GYR Capital said that neither was it the investment banker nor an advisor to the issue.

Promised land

In 2020,’s founders Sahil Agarwal and Sagar Agarwal were approached by Fast Track Finsec, a SEBI-registered category-I merchant banker, with the idea for an IPO.

Fast Track convinced the startup’s founders that it could help them raise funds from the market to grow the business instead of relying on the promoters’ own funds, debt and investments from friends and family, as was the case till then, the copy of the complaint filed by the company showed.

“It is apposite to mention here that being a start-up and due to their lack of familiarity with the capital market, the Promoters were not well acquainted with and required hand-holding even for basic capital market processes, operations and understanding,” said in its SEBI complaint.

As per the draft red herring prospectus of, Sagar Agarwal, a whole-time director and chief financial officer at the company, is Bachelor in Commerce (B.Com.) and has cleared Integrated Professional Competence Examination Certificate held by ICAI. ultimately floated a public offering with the intention of using the funds for strategic initiatives, repayment of some portion of existing debt and general corporate purposes.

Red flags

The promise of raising much-needed capital for the company and getting itself listed on the stock exchanges quickly turned into an ordeal for after it took a look at its agreement with the banker to the issue, ICICI Bank, just before the issue.

“It was for the first time vide the banker to the issue agreement that the complainant got to know that it would be entitled to utilize only Rs 40-45 lakhs from proceeds of the IPO,” said.

According to, the investment bankers coerced the founders into agreeing to invest Rs 4 crore into other entities suggested by the investment bankers by way of strategic investment or unsecured loans.

“The Respondent no. 3 (Abhishek Sharma) stated that if the complainant does not approve of the Respondent No. 1’s (Fast Track Finsec) new and arbitrary arrangement then the whole agreement between the Respondent No. 1 and the complainant would fall apart and the IPO would fail even before it had taken flight,” said. argued that since its founders had committed to repaying its debtors and told employees about the IPO, it was forced to agree to the unfavourable terms under “commercial duress”.

According GYR Capital Advisors' statement to Moneycontrol, the purpose of the IPO funds was decided by the board of the company in a meeting as mentioned in the prospectus of the issue. "Board of directors of Ltd. are well qualified includes chartered accountant, IIT etc. and in the board meeting they have decided the fund utilization and identification of companies," GYR Capital Advisors said.

Further, claimed that Fast Track Finsec assured the founders that it had conducted due diligence on the companies it wanted to invest in and that the company “would be paid back the money invested in or lent to these companies with suitable interest and that the is completely secured as regards the entire arrangement”.

Muddled Details

Disaster struck in the days following the closure of the IPO on August 20, 2020. Having agreed to invest the majority of the proceeds in four firms shortlisted allegedly by the merchant banker, signed and emailed agreements with two of them, Swarnsiddhi and OPCL, for unsecured loan agreements.

The startup also couriered the same documents to the addresses of the two companies but the delivery failed, raising suspicion that both entities were shell companies.

Similarly, entered into an agreement to buy compulsorily convertible debentures of two others companies suggested by the merchant bankers but did not hear from both entities following the execution of the agreement.

On August 28, the day of the market debut when issues arose around the listing of the company, tried to contact the merchant bankers but got no response.

On speaking to ICICI Bank regarding the status of the IPO funds, “the complainant was shocked to learn from the Banker to the Issue that a sum of Rs 4 crore had already been siphoned off from their account”.

Collateral damage

This is not Fast Track Finsec’s first run-in with the regulator. In January, the merchant banker was penalised for failing to make timely disclosure of an open offer in the case of Sea Gold Infrastructure and AKM Lace and Embrotex—in both cases, it was the lead manager to the issue.

However, despite the alleged fraud claimed by, Fast Track Finsec successfully acted as the lead manager in another SME IPO listing, that of Jeena Sikho Lifecare, on the National Stock Exchange’s Emerge platform without any difficulties.

For investors in, meanwhile, things have been going from bad to worse. Investors faced a double whammy of having its funds allegedly siphoned off by the merchant bankers and also the stock has nosedived since its listing.

Having raised funds at an issue price of Rs 105 per share,’s shares have sunk to Rs 29 each and have been suspended from trading due to penal reasons that spring from the IPO case.

While the company has been submitting its quarterly results to the bourse, they are unaudited results that in many occasions were filed late and in some instances did not disclose the results. According to, the delay in disclosure of financial results is down to its inability to secure the services of a statutory auditor in the light of the diversion of its IPO proceeds.

“Apart from defrauding the complainant, the respondents have siphoned the hard-earned money of the subscribers to the company's IPO who had invested with the hope of earning good returns on their investment looking at the recent success of IPOs of SME companies,” said.

Chiranjivi Chakraborty
first published: May 23, 2022 01:10 pm