SME firm Nirman Agri hits 5% lower circuit as SEBI bans firm for alleged IPO fund diversion

SME firm Nirman Agri hits 5% lower circuit as SEBI bans firm for alleged IPO fund diversion

Shares of SME-listed Nirman Agri Genetics Ltd (NAGL) hit 5% lower circuit on October 15 a day after the Securities and Exchange Board of India (SEBI) has barred the firm from accessing the securities market for alleged diversion of IPO funds.

SEBI has also directed the company to halt all proposed corporate actions — including a bonus issue, stock split, and a name change to Agriicare Life Corp Ltd — until further orders.

On October 15, Nirman Agri's shares were trading 5% lower at Rs 166.85 apiece. The 52-week low of the stock is Rs 130 and 52-week high is Rs 456. The market capitalisation of the stock is Rs 133 crore.

In an interim order passed on Tuesday, SEBI Whole-Time Member Kamlesh Chandra Varshney also restrained the company’s promoter Pranav Kailas Bagal from buying, selling, or dealing in NAGL shares, directly or indirectly, till further directions.

SEBI’s investigation found that the company had mis-utilised about Rs 18.89 crore, or 93% of the total IPO proceeds of Rs 20.30 crore, by transferring funds to entities that were either fictitious, suspect in nature, or controlled by Bagal and his relatives. The regulator noted that NAGL submitted conflicting information regarding fund utilisation without any credible explanation for the discrepancies.

SEBI order noted, “The Company has failed to furnish any credible proof of any agreement or invoices backing the transactions between the Company and the said parties. To top it all, in case of three entities to whom the Company claims to have made payment, the bank accounts where the payments were credited were found to be belonging to entirely different parties.”

According to SEBI, NAGL claimed to have paid Rs 12.14 crore to four vendor entities, but these firms had suspect credentials. The company failed to provide valid agreements or invoices to substantiate the payments. In some cases, the bank accounts receiving funds belonged to entirely unrelated parties. Site visits by NSE revealed that the entities were non-existent at the given addresses and no agricultural activities were found, contrary to NAGL’s claims.