News on Medial

Exclusive: ReshaMandi faces complete layoffs, website shutdown, and auditor red flag

EntrackrEntrackr · 10m ago
Exclusive: ReshaMandi faces complete layoffs, website shutdown, and auditor red flag
Medial

The road for ReshaMandi appears to have come to an end as the firm has laid off its entire workforce, sources close to the firm told Entrackr. Significantly, the Creation Investments-backed firm’s website has been down for the past week, coinciding with the resignation of its auditor. “It’s all over for ReshaMandi,” said one of the sources requesting anonymity. “The company is struggling to pay liabilities and bear operational costs including salaries for the past several months.” Team Entrackr has also been trying to access its website since Wednesday last week but it’s not working until the press time. ReshaMandi has been embroiled in corporate governance issues including revenue inflation and fake invoices among others. A few alarming issues were also highlighted by its auditor Walker Chandiok & Co LLP which also resigned last month, the regulatory filing accessed from the Registrar of Companies (RoC) shows. The auditor stated that Saurabh Kumar Agarwal, the CTO, and founder, acknowledged the firm’s financial struggles, including downsizing operations, reducing staff, and the inability to support the audit firm’s efforts to complete the financial statements for FY23. Filings reveal that ReshaMandi owes Rs 14.16 lakh to the auditing firm for services offered. Meanwhile, the Bengaluru-based company also appointed a new auditor Suresh Kapoor & Associates in late July. ReshaMandi also saw back to back resignations of its chief financial officers (CFO). In April 2023, the firm appointed former KPMG CFO Samadrita Chakravarty as its group CFO who took over Ritesh Kumar. Kumar served as CFO between March 2022 to January 2023. As per an Inc42 report, Chakravarty also quit the firm in October last year. Commenting on Entrackr’s queries, a ReshaMandi spokesperson said, “ReshaMandi is facing some financial difficulties and has streamlined its staff, operations and processes to focus on collecting its pending receivables from the market. We continue to believe in coming out of this situation strong and be able to get back on track soon.” The company’s co-founder Mayank Tiwari chose not to address the specific question about the layoffs. ReshaMandi has raised more than $50 million including a $30 million Series A round in October 2021. In June 2022, it also initiated a new funding round and raised a $6.2 million debt in November 2022. The firm’s investors include Creation Investments, Omnivore, 9 Unicorns, Venture Catalysts, Northern Arc, Innoven Capital, and Stride Ventures. As per media reports, it was reportedly in talks to raise $5 million at much lower valuation to clear the long pending salaries of employees. However, the deal did not materialize. For a firm that claimed to be on course for Rs 1,900 crore in gross revenues in FY23, the fall is certainly a surprise, however skeptical many in the market might have been about its numbers. It does seem to be a case of flying too high for a better valuation, only to be burnt by the reality of its operating market and poor processes for Reshamandi. For any startup chasing growth only for the next round of funding and higher valuation, this is a perennial existential risk, when a potential investor (Temasek in this case) decides to move back or wait it out. Even though some might say that the whole drive for the next round and valuations is frequently driven by investors themselves. Temasek has clearly seen something that convinced it to take a break even if that might mean curtains for ReshaMandi.

Related News

Byju’s auditor resigns over lack of transparency; founder cries foul

EntrackrEntrackr · 10m ago
Byju’s auditor resigns over lack of transparency; founder cries foul
Medial

Byju’s perils have been deepening with every passing day, and in a recent development, its auditor has put in papers citing several reasons, including lack of transparency and pending legal matters, among others. BDO (MSKA & Associates), which was appointed as Byju’s auditor for a period of five years (2022 to 2027, has stepped down through a letter submitted to the Registrar of Companies (RoC). However, Byju’s co-founder Byju’s Raveendran reportedly termed BDO’s (MSKA & Associates) resignation as blackmail tactics. As per his letter to the auditor, he said that the firm has complied with every request made by the auditor. BDO made a request to conduct forensic audit on Byjus after the beleaguered firm admitted into insolvency in July. “There has been inadequate support from the management of the company in providing us the books of account, information and explanations sought by us and sufficient appropriate audit evidence to enable us to complete the audit for the Financial Year 2022-23. We had requested audit information from the management through multiple communications including emails” mentioned the auditor resignation letter. BDO said that Byju’s has lost control over certain of its subsidiaries and had no access to their books of account due to litigation with lenders. Liquidation process, shareholder’s allegations and show cause notice by the Enforcement Directorate (ED) were some other key issues. Byju’s has been grappling with a clutch of issues circling corporate governance for the past two years. However, the stepping down of the auditor just after a year is another big blow. It’s worth pointing out that BDO is the second auditor to resign in the past 15 months. In June last year, Deloitte resigned as auditor from Byju’s and its affiliate company Aakash Educational Services citing delay in submission of financial statements for FY22.

Download the medial app to read full posts, comements and news.