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boAt auditors flag discrepancies and compliance gaps across FY23 to FY25

Entrackr · 6d ago

Medial

Consumer electronics brand boAt has disclosed a series of financial reporting and compliance lapses in its updated draft red herring prospectus (DRHP). The statutory auditors of Imagine Marketing, the parent entity of boAt, issued several unfavourable remarks relating to mismatches in statements, fund utilisation, governance, and internal controls across FY23 to FY25. According to the filing, quarterly returns and statements submitted to banks were not in agreement with the company’s books of accounts for FY23, FY24, and FY25. The auditors also noted instances of short-term borrowings being used for long-term purposes in FY23 and FY24, in violation of standard financial discipline. Governance lapses were also highlighted in the DRHP. The company paid excess remuneration to directors in FY23, breaching limits prescribed under Section 197 of the Companies Act. Auditors flagged arrears of undisputed statutory dues in FY23 and FY25, along with non-maintenance of electronic backups of books of account by two subsidiaries for FY23. Additionally, boAt did not conduct physical verification of plant, property, and equipment for FY23 due to a change in its verification policy. boAt said it has taken corrective steps, including filing revised statements and obtaining shareholder approval for the excess remuneration. In October, the company refiled its updated DRHP with SEBI, reducing its IPO size to Rs 1,500 crore. The IPO includes an issue of equity shares worth Rs 500 crore, while existing shareholders and co-founders will offload shares worth Rs 1,000 crore through an offer for sale (OFS). For the fiscal year ended March 2025, boAt reported Rs 3,073 crore in operating revenue and a net profit of Rs 61 crore, turning around from a loss of Rs 79.6 crore in FY24. In the first quarter of FY26, the company reported operating revenue of Rs 628 crore and a net profit of Rs 21.35 crore.