DroneAcharya Aerial Innovations’ spectacular fall from a hyped SME IPO to a SEBI‑barred stock is now a textbook case of how small‑cap “growth stories” can be manufactured through accounting tricks, fund diversion and pre‑IPO hype.
IPO journey and headline financials
DroneAcharya listed on the BSE SME platform in December 2022 with an issue price of ₹52–54 per share and raised about ₹33.96 crore through its IPO. The stock listed around ₹102, delivering nearly 90% listing gains, and for a time traded at rich valuations on the back of India’s “drone opportunity” narrative.
At the time of the IPO, restated financials showed a tiny but fast‑growing company: revenue jumped from almost nothing to ₹3.59 crore in FY22, with PAT of ₹40.65 lakh, and an annualised revenue of ₹12.36 crore and PAT of ₹2.88 crore based on June 2022 numbers. Assets rose from just ₹1.19 crore in FY21 to ₹15.46 crore in FY22 and ₹34.03 crore by June 2022, reflecting a balance sheet suddenly flush with capital.
Post‑listing, the company reported a dramatic revenue surge: ₹3.58 crore in FY22, ₹18.56 crore in FY23, and ₹35.19 crore in FY24, alongside a reported FY24 profit before tax of ₹8.44 crore. SEBI’s investigation has now shown that a material part of this growth was fictitious.
What SEBI found: how the “heist” worked
During 28 November 2025 order, covering FY23 and FY24, it details a multi‑layered scheme involving IPO‑fund diversion, fabricated revenues, misleading announcements and hidden related‑party deals.
1. Misuse and diversion of IPO proceeds
Company told IPO investors it would use ₹27.98 crore of the proceeds to buy drones and related accessories from four vendors. SEBI found that:
- Only about ₹70 lakh was actually spent on drones.
- Roughly ₹27.28 crore was diverted into fixed deposits or routed via questionable “software” and “computer items” purchases from entities that were either not genuine software vendors or had highly inflated invoices.
- Quotations and vendor details for these supposed software purchases were never disclosed in the prospectus, and many invoices did not match market pricing or the vendors’ real line of business.
SEBI concluded that the company and its promoter‑directors “mis‑utilised, siphoned and misrepresented” the use of IPO proceeds, violating both the stated objects of the issue and disclosure norms.
2. Fabricated revenues and profits
To support a story of explosive growth, DroneAcharya allegedly booked fake revenues:
- For FY24, the company recognised about ₹12.35 crore of income from Triconix and IRed even though no services were rendered and no goods were delivered.
- This fictitious revenue accounted for roughly 35% of annual sales; without it, the company would have reported a pre‑tax loss instead of the claimed ₹8.44‑crore profit.
In SEBI’s view, promoters knowingly misrepresented financial performance to create an illusion of scale and profitability, which propped up the share price and attracted more retail interest.
3. Pre‑IPO fundraising and “exit management”
Before the public issue, between February and June 2022, DroneAcharya raised about ₹32.35 crore from 199 pre‑IPO investors via optionally convertible preference shares (OCPS). SEBI notes that:
- Many of these investors, including some celebrities, were allegedly given verbal assurances of a quick listing and high listing gains.
- After listing, the company pumped out a series of promotional, often misleading announcements about new contracts, partnerships and drone orders that were either exaggerated or not backed by real business.
- SEBI calculated that 168 pre‑IPO investors exited post‑listing, collectively booking around ₹89.6 crore in gains, including one investor who made over 5,800% return.
This pattern led the regulator to conclude that disclosures and announcements were being used to keep demand and price artificially elevated so that insiders and early investors could cash out.
4. Undisclosed related‑party transactions
SEBI also uncovered that DroneAcharya transferred about ₹10.6 crore to Awyam Synergies, a promoter‑owned company, without properly disclosing this as a related‑party transaction in the IPO documents or annual filings. Additional flows went through entities such as Micro Infratech and other connected parties via inflated or bogus invoices.
These hidden transfers further supported SEBI’s conclusion that the promoters were using the listed entity’s funds for personal or related‑party benefit while keeping investors in the dark.
Sanctions and market impact
SEBI’s order imposed:
- A two‑year ban on DroneAcharya Aerial Innovations and promoters Prateek Srivastava and Nikita Srivastava from accessing the securities market or dealing in securities, directly or indirectly.
- A total monetary penalty of ₹75 lakh, including ₹20 lakh each on the two promoters and additional penalties on the company and certain advisors who, in SEBI’s view, aided or failed to detect the misconduct.
- Restrictions on disposal or encumbrance of assets and shareholdings without SEBI’s prior permission.
The day after the order, the stock crashed nearly 20% to ₹45.38, hitting the lower circuit on BSE SME as investors digested the findings. With a market cap that had already shrunk about 50% over the past year before the ban, DroneAcharya now stands as a cautionary tale—where a supposed sunrise‑sector listing has turned into a governance blow‑up.
What the earlier IPO‑era numbers really meant
Looking back at the IPO disclosures in light of SEBI’s findings:
SEBI’s order effectively argues that the growth story used to justify a rich IPO valuation and subsequent trading levels was, to a significant extent, engineered rather than earned.
Why this matters for investors and SME listings
For public‑market investors, the DroneAcharya episode underlines three key lessons:
- Restated IPO numbers can still hide aggressive accounting. Even when audited, revenue spikes and margin jumps in tiny companies need deeper diligence, especially when they coincide with highly promotional narratives.
- Pre‑IPO valuations and exit patterns are critical. A large pre‑IPO round with hundreds of small investors promised quick exits, followed by aggressive post‑listing announcements and heavy selling, is a red flag in itself.
- Governance risk is higher in SME platforms. SEBI’s sharp response—banning the company and promoters and naming auditors, compliance officers and the merchant banker—signals an intent to tighten oversight, but for now, SME investors still need to assume a higher baseline risk.
