Have you ever seen a captain leaving the ship even before it even sails? That is exactly what the founders of boAt seem to be doing with their upcoming IPO. The Indian audio brand that was once the talk of the town with its loud marketing and celeb power is now surrounded by red flags.
Founders jumping ship before launch
Just 29 days before the IPO announcement, the two founders Aman Gupta and Sameer Mehta decided to give up their most influential roles in the company. Aman terminated his CMO role, while Sameer and decided to let go off the CEO position. Both are now non-executive directors on the board.
In theory, it looks like a simple restructure with a change in management, but the timing of the event is definitely raising people's eyebrows. How come characters who are showing and delivering the brand decide to take a step back at the time when the public offering is at a crucial stage?
Changing leadership, high employee attrition
When there is a change in leadership, some anxieties may be felt at the lower levels. BoAt DRHP states concerning employee attrition rate. It is stunning to the highest degree, more than 34% of the staff has left the company during the last twelve months.
It is a brand that is still entirely dependent on lifestyle innovation, supply chain management, and consumer trends, but there is some speculation that such instability can be the symptom of deep operational challenges in the company.
Auditors highlight financial mismatches
One of the biggest red flags surround boAt are notes from the auditors. BoAt's auditors have been pointing out discrepancies in the company's financial statements, three years in a row.
The bank statements that the company has submitted do not coincide with the ones from the internal books. Such mismatches are not minor accounting errors - they bring forward serious questions about management and openness.
Investor trust can be lost pretty quickly in cases where a company is not fully consistent in its financial disclosures.
BoAt managed to make a profit of roughly ₹60 crore in the previous year, in spite of the problems mentioned above, and has plans of raising ₹1,500 crore through the IPO. On the other hand, with the situation of the exits at top management, the high employee turnover rate, and auditor red flags that have been highlighted, analysts are warning investors to be very cautious.
The startup that was once seen as the new wave of success in Indian tech may now be the trillion-dollar question: how much longer can they keep investor trust?
