Three individuals, Nirmal Kotecha, Pavan Kuchana, and Kishore Tapadia, were arrested on Friday for their roles in manipulating the Initial Public Offering (IPO) of Taksheel Solutions Limited, Hyderabad. The Securities and Exchange Board of India (SEBI) probe revealed misleading statements in the company's prospectus which resulted in inflated revenues and misappropriation of IPO proceeds.
The trio used Inter-Corporate Deposits (ICDs) worth ₹34.50 crore to inflate Taksheel's revenue through circular transactions with Kuchana's US-based entities before the IPO. This manipulation led to an artificial increase in profitability. Following the IPO, which raised ₹80.50 crore (INR100 crore = approx. USD12 million), the ICDs were repaid from the IPO proceeds and ₹34.50 crore was diverted to Kuchana's US entities as service payment.
In a further twist, another ₹23 crore was transferred under the guise of software purchases to Indian entities and eventually reached Kotecha's entities in Singapore, Hong Kong, and Dubai. An additional ₹30.50 crore was moved from the US-based entities to Singapore and Hong Kong, while ₹18 crore was transferred as IPO-related expenses.
The funds were also circulated through Kotecha-controlled entities in Singapore or Hong Kong under the pretense of service supply payments and software product purchases. Kotecha is a resident of the Republic of Vanuatu.
A portion of the crime proceeds was also transferred from Taksheel Solutions Ltd to various individuals or entities such as Software Technology Parks of India (STPI) development expenses, salaries, and payments to vendors.
The Court of Metropolitan Sessions Judge (MSJ) in Hyderabad has remanded them into custody until October 25. The investigation continues as authorities seek to unravel the full extent of this complex financial fraud.
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