Boat's IPO plans hit by financial discrepancies, compliance issues
What's the story
Boat, a leading consumer electronics brand, has been hit by financial discrepancies and compliance issues flagged by its auditors. The concerns were raised in the company's updated draft red herring prospectus (DRHP), which was filed over a month ago. The Gurugram-based firm is currently preparing for its second attempt at an initial public offering (IPO).
Audit findings
Auditors flag financial mismatches and operational lapses
The auditors, BSR & Co LLP, found that quarterly statements submitted to banks did not match with Boat's books for FY23, FY24, and FY25. They also noted cases where the short-term borrowings were used for the long-term needs of subsidiaries. Other financial-control lapses were also observed during the review period.
Subsidiary concerns
Compliance issues across subsidiaries
The audit also raised concerns about two overseas subsidiaries, Kaha Pte Ltd and Imagine Marketing Singapore Pte Ltd, struggling to meet their liabilities in FY23 and FY24. Other compliance issues included pending statutory dues, non-compliance with mandatory audit-trail requirements for subsidiaries, missing the backups of accounting records, and improper physical verification of plant and equipment in FY23.
Remedial measures
Boat's response and future assurance
In response to these issues, Boat has taken steps like reconciling the mismatched information, implementing compliant accounting systems, and securing necessary shareholder approvals. However, the auditors have said that there is no guarantee that similar issues won't happen again. This highlights the need for continued focus on strengthening internal processes at Boat.
IPO details
IPO plans and market backdrop
The audit findings come as Boat prepares for its ₹1,500 crore IPO. The offer includes a fresh issue of ₹500 crore and an offer for sale worth ₹1,000 crore by founders Aman Gupta and Sameer Mehta as well as early investors Warburg Pincus, Fireside Ventures, and Qualcomm Ventures. This is smaller than the earlier plan for a ₹2,000 crore float.