SEBI bans Varyaa Creations from market; restrains banker Inventure from new assignments in alleged IPO funds siphoning

SEBI found that the lead manager had transferred ₹14 crore, forming nearly 70 per cent of the issue proceeds, to Kaveri Corporation, Maruti Corporation, and Overseas Metal and Alloys Pvt — which have not been disclosed in the prospectus
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FRANCIS MASCARENHAS

The Securities and Exchange Board of India (SEBI) has banned Varyaa Creations from the market, and has restrained merchant banker Inventure from taking any new assignment for allegedly siphoning off funds raised in its initial public offer (IPO).

In an interim order, the regulator restricted the small and medium enterprise (SME) from buying, selling or dealing in the securities market or associating themselves with the market, either directly or indirectly, in any manner whatsoever until further orders. The shares of its promoters — Pooja Naheta, Sarika Naheta, Kusum Naheta, Jaineshaa Naheta, and Pari Naheta — have also been frozen.

Merchant banker Inventure Merchant Banking Services has been directed to appoint a monitoring agency to monitor the use of proceeds in case of pending assignments and to not take up any new assignments.

modus operandi

SEBI found that the lead manager had transferred ₹14 crore, forming nearly 70 per cent of the issue proceeds, to Kaveri Corporation, Maruti Corporation, and Overseas Metal and Alloys Pvt — which have not been disclosed in the prospectus. Further, ₹9 crore out of the ₹14 crore were withdrawn in cash on the listing day.

“The absence of any business connection between the stated Agra showroom and the Gujarat-based Kaveri Corporation and Overseas Metal and Alloys Pvt Ltd, coupled with the immediate onward transfer or withdrawal of funds in cash, undermines the explanation offered and casts serious doubt on the authenticity and purpose of these transactions,” Whole-time member Ashwani Bhatia said in the order.

This case presented a similar modus operandi as Synoptics Tech’s IPO, which was handled by First Overseas Capital – who was earlier appointed as Varyaa’s lead manager. SEBI also found a link between the two cases through a recipient of funds, Transpaacific Shipping and Resources, which will be further examined by the regulator.

The Whole-time member has also advised the stock exchanges – NSE & BSE – to take note of the orders passed on SME listed companies and exercise due care and diligence while permitting listing. “Instances like the present one, where the company barely got access to 30 per cent of the issue proceeds, cannot definitely be in the interest of the investors in the securities market,” Bhatia said.

The regulator said there was a need for interim directions as the lock-in period applicable to promoters’ shareholding expires on Tuesday, and there is a risk of the promoters offloading the shares held by them.

Published on May 14, 2025