Trafiksol ITS Technologies Limited entered the public market with the kind of investor response most small companies can only hope for. Its ₹44.87 crore SME IPO was subscribed 345.65 times, shares were allotted, and listing was scheduled for September 17, 2024.
But the shares never reached the market.
A complaint concerning the proposed use of nearly 40% of the IPO proceeds led the Bombay Stock Exchange, in consultation with the Securities and Exchange Board of India, to defer the listing. What initially appeared to be a question about one software vendor eventually developed into a wider investigation involving the company’s revenue, customer and supplier disclosures, issue expenses, related financial arrangements and the responsibilities of its promoters.
In its final order dated August 28, 2026, SEBI restrained Trafiksol and its promoters, Jitendra Narayan Das and Poonam Das, from accessing the securities market for one year. The regulator also imposed combined monetary penalties of ₹1.05 crore.
The case offers an important lesson for every company preparing to raise public capital: an IPO prospectus is not simply a marketing document. It is a regulatory representation on which investors are expected to rely.
How the Trafiksol IPO Came Under Scrutiny
Trafiksol filed its Draft Red Herring Prospectus with BSE on May 31, 2024. The company proposed a fresh issue of 64.10 lakh shares at a price band of ₹66 to ₹70 per share.
The IPO opened on September 10 and closed on September 12, 2024. It was priced at ₹70 per share, raising ₹44.87 crore.
The disclosed use of funds included:
- ₹17.70 crore for purchasing software
- ₹5.50 crore for repayment or prepayment of borrowings
- ₹10.40 crore for working capital
- ₹8.28 crore for general corporate purposes
- ₹2.99 crore for issue-related expenses
Soon after the issue closed, a complaint questioned the proposed purchase of Integrated Command Control Centre software worth ₹17.70 crore. The quotation supporting this expenditure had been obtained from Oasis Corpcare Private Limited.
Concerns emerged because Oasis had reportedly not filed financial statements with the Ministry of Corporate Affairs for more than three years and had disclosed nil revenue in the latest available year.
BSE deferred the listing, while SEBI directed that the IPO proceeds be placed in an interest-bearing escrow account.
A ₹17.70 Crore Software Proposal Based on a Questionable Quotation
SEBI’s investigation found that Oasis lacked the technical expertise and operational capacity required to deliver the proposed software.
The regulator noted that Oasis had allegedly been acquired for ₹20,000 and had no credible record of executing a project of this nature. Companies presented as its clients also reportedly denied having business dealings with it.
The vendor profile submitted to BSE described Oasis’s directors as professionals specialising in smart-city traffic-control software. However, SEBI found that these credentials and parts of the client information were fabricated.
The quotation was dated May 16, 2024. Within two days, Trafiksol’s board had noted and approved the proposed procurement. SEBI also observed that the approval did not follow the company’s stated procurement policy, which contemplated obtaining at least three quotations for a technical and commercial comparison.
A previous SEBI order concluded that Trafiksol had relied on a quotation from what it described as a shell entity. The Securities Appellate Tribunal subsequently dismissed the company’s appeal and upheld the finding concerning the misstatement in its prospectus.
Since the proposed purchase accounted for nearly 40% of the IPO proceeds, the credibility of the quotation was fundamental to investors’ understanding of how their money would be used.
Financial Disclosures Did Not Reflect the True Scale of Operations
SEBI’s final order went beyond the software purchase and examined Trafiksol’s financial disclosures for FY 2023-24.
The regulator found that approximately ₹13.40 crore of reported sales—more than 20% of the company’s ₹65.81 crore revenue from operations—arose from unsupported year-end revenue recognition and transactions that artificially enlarged the company’s financial footprint.
This included ₹4.50 crore in unbilled revenue and approximately ₹8.90 crore in sales linked to corresponding purchases involving Limco Global Services and Ishira Global Service.
SEBI observed that Trafiksol’s role in some of these transactions was substantially that of an invoicing intermediary. By recording the full purchase value and subsequent sale value, the company was able to present a considerably larger volume of business than the underlying economic activity indicated.
The order also noted that more than ₹11 crore in receivables from Limco and Ishira remained unrealised at the time of the company’s response.
SEBI concluded that the FY 2023-24 financial information did not accurately represent the true nature and scale of Trafiksol’s operations and was materially misleading to prospective investors.
Customer and Supplier Concentration Was Obscured
An investor assessing a company’s business must understand whether its revenue or procurement depends heavily on a small number of entities. That is why offer documents separately disclose major customers and suppliers.
Trafiksol had both purchase and sales transactions with Limco and Ishira. However, the company presented some of these dealings on a net basis instead of showing the entities fully as both customers and suppliers.
SEBI rejected the company’s explanation that this was a conservative treatment intended to prevent duplication.
The regulator observed that purchases from Limco and Ishira represented more than 22% of the company’s total purchases for FY 2023-24. Without netting, sales to the two entities would have represented approximately 30% of disclosed sales; after netting, their share appeared to be only about 13%.
According to SEBI, this presentation prevented investors from properly understanding the company’s counterparty dependence and business concentration.
Undisclosed IPO Expenses and Potential Conflict of Interest
The order also identified ₹45 lakh paid to an IPO consultancy firm that was not properly reflected in the issue-expense disclosures in the Red Herring Prospectus.
Although the company argued that this amount was small relative to its turnover and total issue size, SEBI compared it with the ₹78.05 lakh of issue-related expenses already disclosed. Viewed against that figure, the regulator considered the omitted payment significant.
A separate issue involved ₹67 lakh paid by Trafiksol to the father of a person who was a director and 99% shareholder of the IPO’s sole merchant banker.
Trafiksol explained that the payment related to a leave-and-license arrangement for a proposed Mumbai office. SEBI found insufficient evidence to conclude that the arrangement involved illegal gratification. However, the regulator held that the continuing financial relationship and potential conflict of interest should have been disclosed in the DRHP.
This distinction is important: SEBI did not accept every allegation raised during the proceedings, but it found that the omission itself violated disclosure requirements.
The Promoters’ Responsibilities
Jitendra Narayan Das served as Trafiksol’s Chairman and Managing Director, while Poonam Das was its Whole-Time Director. Both were promoters and signatories to the financial statements and offer documents.
SEBI found Jitendra Das directly involved in key aspects of the misconduct, including the Oasis quotation. The order also referred to his acknowledgement that a year-end accounting entry had been passed to inflate turnover.
Poonam Das was not found to have the same degree of direct involvement. However, SEBI held that her position, certification of relevant documents and failure to exercise appropriate diligence made her responsible for the company’s contraventions.
The order makes a broader governance point: directors cannot treat approval and certification of IPO disclosures as procedural formalities. Signing an offer document carries responsibility for its accuracy.
SEBI’s Final Directions and Penalties
SEBI restrained Trafiksol, Jitendra Das and Poonam Das from accessing or dealing in the securities market for one year.
The penalties imposed were:
- Trafiksol ITS Technologies Limited: ₹30 lakh
- Jitendra Narayan Das: ₹50 lakh
- Poonam Das: ₹25 lakh
The combined penalty amounted to ₹1.05 crore.
SEBI acknowledged that investors ultimately suffered no financial loss because the IPO was cancelled and subscription money was refunded with interest. However, it emphasised that the refund resulted from regulatory intervention and did not erase the underlying violations.
Shunyatax Global Insights
The Trafiksol order shows that attractive revenue figures and strong IPO demand cannot replace accurate disclosures, genuine vendor due diligence and responsible board oversight.
Before raising public capital, companies must ensure that their financial statements, issue expenses, customer relationships and proposed utilisation of funds are consistent, verifiable and transparently disclosed.
If you or your business is facing challenges involving fundraising, financial reporting, transaction structuring or regulatory compliance, Shunyatax Global can help you approach them with greater clarity and professional guidance.
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Disclaimer: This article is based on SEBI’s final order dated August 28, 2026, and is intended for general information only. It does not constitute legal, investment or financial advice.