A group of investors raise concern over Rosmerta Digital Services' SME IPO papers

Mumbai, Nov 13: Several complaints with the Securities & Exchange Board of India (SEBI), Finance Ministry and other authorities have been filed against the promoters of Rosmerta Digital Services, a three-year-old company by a group of investors that has filed a Draft Red Herring Prospectus (DRHP) with the SEBI to raise Rs 206 crore through an SME IPO, as per the sources. Bizz Buzz has seen the letter of complaint. The company is engaged in providing digitally enabled services and digitally enabled channel sales of automotive components & accessories

The issue, with a price range of Rs140 to Rs 147 apiece, will conclude on November 21. The bidding for anchor investors will open for a day on November 14, the company said in a public notice. The IPO will be a complete fresh issue of 140.36 lakh equity shares valued at Rs 206.33 crore at the upper end of the price band.

The promoters namely Kartick Vivek Nagpal, Karan Vivek Nagpal and Rosmerta Technologies and Trust Promoter representative Aarti Nagpal and other unknown persons have been accused of resorting to and indulging in fraudulent malpractices by deliberate concealment of crucial material facts/information and presenting distorted financial data while filing "DRHP the newly formed entity namely "Rosmerta Digital Services".

An investor, who doesn’t wish to be quoted, has said in his complaint to the finance secretary, said that the investment bankers he has hired have absolutely no standing or background in the Capital Market and there is so much information which should be disclosed in the red herring prospectus so that the Investors can transparently read the same but he has purposely chosen not to disclose the same.

Another Mumbai based investor Rohit Vijay Nirmal said, “I have lodged a formal complaint against the accused persons and other unknown associates who are their aides in their illegal acts of deliberate suppression of crucial facts and concealment of material information regarding their business activities and business interests and further actively involved in fraudulent activities including market manipulation, money laundering, siphoning of loan amount availed from banks and other organized financial crime activities and violation of multiple regulatory frameworks.”

RDSL has presented dramatically and artificially inflated and manipulated financial figures in their DRHP with an aim to rig share pricing of IPO to higher side.

The absence of transparent and independent governance mechanisms to mitigate and address these conflicts further exacerbates concerns, raising serious doubts about the integrity and fairness of the decision-making processes within these entities, he said.

“Given his deep involvement, there is a risk that business decisions could be swayed to benefit his personal interests or those of his close associates, rather than the interests of public shareholders. This creates a situation where the lines between personal and corporate interests are blurred, potentially compromising corporate governance standards and shareholder value,” he further said.

In view of the gravity of the deliberate non-disclosures, concealment of facts, offenses by the accused person's along with other unknown persons and the overwhelming evidence provided, It is hereby requested to protect the interests of potential retail investors and maintain the integrity of the capital markets by disapproving the DRHP filed by Rosmerta Digital Services, the complainant said the authorities have been urged to suspend all progress toward Rosmerta Digital Services listing until a comprehensive and detailed investigation is conducted in the matter from all aspects.