Rosmerta Digital Services Defers Its IPO

Bizz Buzz, in its story in the edition dated November 14, 2024, had mentioned the complaints registered by certain investors against allegedly hiding facts in the DRHP which had been filed by it, to various competent authorities

Mumbai: Rosmerta Digital Services, an alleged shell company with questionable credentials facing multiple allegations of concealment information in its DRHP for India’s biggest ever SME IPO, estimated at Rs206 crore, has withdrawn the IPO following mounting pressure from whistleblowers and instructions from the Sebi and Finance Ministry, revealed the sources familiar with the development. Bizz Buzz, in its story in the edition dated November 14, 2024, had mentioned the complaints registered by certain investors against allegedly hiding facts in the DRHP which had been filed by it, to various competent authorities.

This is for the first time that a disproportionately big SME IPO has been pulled out from just before bidding.

The company has stated in the advertisement, which was carried by certain newspapers on November 14, that the IPO has been ‘postponed’ due to current adverse market condition. However, it is reliably learnt that the book running lead managers (BRLMs) were pulled up by the authorities for hurriedly pushing an issue without making due disclosures in the red herring prospectus and thus keeping investors in the dark.

The complainants have now demanded a thorough probe by government agencies and commencement of forensic audit of the allegations made. The capital market regulator, Securities & Exchange Board of India (Sebi) had forced the company to withdraw the issue after various complaints were received alleging lack of disclosure in its filings about alleged involvement in market manipulation by the father of the promoters who had earlier rigged share prices and was convicted, sources familiar with the development revealed.

The BRLMs Nornolia Financial Services, Beeline Capital Advisors have been given warning by the market regulator, sources added. Even the Finance Ministry has taken strong view on this matter, the sources said.

The company had fixed the price band at Rs140 to Rs147 per share with face value of Rs2 each to raise Rs206 crore.

The three year old company was raising capital to purchase office space in Mumbai and set up ‘experience centres’ in various parts of the country.

Sebi, Finance Ministry and other authorities had received various complaints in the past week alleging the promoters Kartick Vivek Nagpal, Karan Vivek Nagpal and Rosmerta Technologies and Trust Promoter representative Aarti Nagpal and other unknown persons of resorting to and indulging in fraudulent malpractices by deliberate concealment of crucial material facts and presenting distorted financial data of the company.

The IPO was supposed to be the biggest ever IPO in the SME segment, which comprised solely of fresh issue of 1.4 crore equity shares. The price band for the offer was Rs 140-147 per share.

The issue was scheduled to open on November 18 and close on November 21.

“The initial public offering (IPO), which was originally scheduled to open on November 18, has been postponed,” Rosmerta said in its advertisement published in newspapers.

The company further said the decision to postpone the IPO has been taken in light of the current adverse market conditions, after careful deliberation and in consultation with the book running lead managers.

The company, which is into providing digitally-enabled services for automotive components and accessories, will announce the revised schedule at an appropriate time.

The Haryana-based company was supposed to utilise IPO proceeds for the purchase of office space in Mumbai, setting up warehouses, model workshops and experience centres in various parts of India, setting up IT infrastructure, and working capital requirement, and inorganic growth through acquisitions.