Mumbai, August 19: Gaja Capital’s IPO opened for retail investors on Tuesday. The company has outlined several risk factors in its Red Herring Prospectus (RHP) that are crucial for potential investors to understand. Key risks include negative cash flow from operations, reliance on carried interest, a period during which the audit trail feature was inactive, and the promoter’s name appearing on the RBI’s default list.
According to the RHP, Gaja Capital has reported negative cash flow in recent years. The net cash flow from operations was -₹8.75 crore in FY25 and -₹14.98 crore in FY26.
Additionally, the company’s auditors have made some unfavorable comments regarding its accounts. In FY26, they noted that Gaja Capital used accounting software that was supposed to maintain an audit trail. This feature was operational for all transactions recorded throughout the year. However, it was inactive from April 1, 2025, to August 27, 2025.
Despite this, the auditors stated that they did not find any instances of tampering with the audit trail feature during their audit when it was operational. The company has assured that it has preserved the audit trail in accordance with legal requirements from the date it became active.
An audit trail is crucial for any company, as it allows for easy tracking of changes made to accounts. The company also indicated that a significant portion of its income is derived from carried interest, which may lead to fluctuations in total revenue. In FY24, carried interest accounted for 17.69% of total income, rising to 52.25% in FY25, and slightly decreasing to 47.79% in FY26.
Furthermore, the RHP disclosed that one of its promoters, Gopal Jain, is listed on the RBI’s list of accounts with defaults exceeding ₹1 crore, for which no legal action has been taken. This inclusion stems from Jain’s previous role as a nominee director for another company, Educomp Infrastructure and School Management Limited.
However, Gaja Capital clarified that Jain was not associated with that company at the time of the default. The Union Bank of India, which merged with Corporation Bank in 2020, has issued a letter to remove Gopal Jain’s name from the list.
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