Rosmerta Digital Services had aimed to launch the largest initial public offering (IPO) in India’s SME sector, targeting a raise of Rs 206 crore through a new issuance of 1.4 crore equity shares. However, the IPO, which was scheduled to open on November 18 and close on November 21, 2024, has been postponed due to unfavorable market conditions and reported allegations of malpractice by the company's promoters.

Background of the IPO Cancellation

The price range of the offer was set between Rs 140 and Rs 147 per share. Rosmerta Digital Services announced on November 14 that the IPO had been deferred. This move was influenced by a decline in the Indian stock market, which has fallen over 10% since its record high on September 27, 2024. This downturn has impacted investor sentiment across sectors, leading companies to reconsider planned IPO launches.

Allegations Against Promoters

Recent reports indicate that SEBI (Securities and Exchange Board of India), the Finance Ministry, and other regulatory bodies received multiple complaints against Rosmerta Digital’s promoters. Kartick Vivek Nagpal, Karan Vivek Nagpal, Rosmerta Technologies Ltd., and representative Aarti Nagpal are alleged to have engaged in fraudulent activities. According to sources, the complaints include accusations of deliberate concealment of material facts and distortion of financial data in the company’s Draft Red Herring Prospectus (DRHP).

Statement from Rosmerta Digital Services

In a public statement via a newspaper ad, Rosmerta confirmed the postponement, explaining that they would reevaluate the IPO timing once market conditions are favorable. The Haryana-based company, known for offering digital services for car parts and accessories, planned to use the IPO proceeds for expanding its operational capacity. These plans included acquiring office space in Mumbai, establishing warehouses, model workshops, experience centers across India, building IT infrastructure, and inorganic growth through acquisitions.

Regulatory and Market Repercussions

The postponement of Rosmerta Digital’s IPO reflects broader concerns within the Indian IPO market. Investor confidence has been somewhat shaken by recent market trends and allegations of corporate malpractice in some IPO-bound firms. SEBI and other regulatory bodies are actively investigating to ensure transparency and protect investor interests in the market.

In light of these developments, Rosmerta Digital Services has reassured stakeholders that it will make the necessary adjustments to its DRHP and continue to maintain regulatory compliance. Once the market stabilizes, the company plans to proceed with the IPO and update investors on the revised timeline.

Future Outlook

With significant growth potential in India’s automobile services sector, Rosmerta Digital’s ability to address regulatory concerns and regain investor confidence will be critical for its future. The outcome of SEBI’s investigation could set a precedent for upcoming IPOs, emphasizing transparency and accountability in financial disclosures.

The Upcoming IPOs in this week and coming weeks are Lomosaic India, C2C Advanced System, Rosmerta Digital, NTPC Green, Avanse Financial and Nisus Finance.

The Current active IPO are Zinka Logistics Solution (Black Buck), and Onyx Biotec.

For more insights into financial trends , visit our Top News Headlines. You can also explore investment opportunities in the market and apply for upcoming IPOs through our Best IPO to Apply Now section.