SUMMARY
- ReshaMandi has let go of all its employees, while the firm’s website has been offline for the past week, coinciding with the departure of its auditor.
- ReshaMandi has been involved in issues related to corporate governance, including allegations of inflating revenues and issuing fraudulent invoices, among other problems.
- The company’s financial records show that ReshaMandi owes Rs 14.16 lakh to the auditing firm for the services provided.
The journey for B2B marketplace for silk products ReshaMandi seems to have reached a dead end as the company has let go of all its employees, according to insiders close to the situation. This comes at a time when the firm’s website has been offline for the past week, coinciding with the departure of its auditor.
ReshaMandi has been involved in issues related to corporate governance, including allegations of inflating revenues and issuing fraudulent invoices, among other problems.
The auditor Walker Chandiok & Co LLP, who resigned last month, highlighted several concerning issues, including the company’s financial struggles, including downsizing, staff reductions, and the firm’s inability to support the audit firm’s efforts to complete the financial statements for FY23.
The company’s financial records show that ReshaMandi owes Rs 14.16 lakh to the auditing firm for the services provided. Additionally, the company has appointed a new auditor, Suresh Kapoor & Associates, in late July.
ReshaMandi has experienced consecutive resignations of its chief financial officers. In April 2023, the company brought on former KPMG CFO Samadrita Chakravarty as its group CFO, who took over from Ritesh Kumar, who served as CFO from March 2022 to January 2023. An Inc42 report indicates that Chakravarty also left the company in October last year.
The company’s co-founder Mayank Tiwari has chosen not to address the specific issue of the layoffs.
The company’s backers consist of Creation Investments, Omnivore, nine Unicorns, Venture Catalysts, Northern Arc, Innoven Capital, and Stride Ventures.
Despite raising over $50 million, including a $30 million Series A round in October 2021, and initiating new funding rounds in June 2022 and November 2022, respectively, the company has faced a significant setback. According to sources, there were discussions about securing $5 million at a significantly reduced price to settle the overdue wages of staff. Nonetheless, the agreement did not come to fruition.
For a company that boasted about achieving Rs 1,900 crore in total revenues for FY23, the decline is unexpected, though many market participants might have been doubtful about the accuracy of its financial projections. Its ambitious growth plans, aimed at securing a higher valuation for the next funding round, have backfired, as a potential investor, Temasek, has decided to either wait it out or pull out.
This situation highlights the risk of chasing growth at the expense of a sustainable valuation, a common pitfall for startups aiming for higher valuations in future funding rounds. Temasek’s decision to pause or withdraw its investment suggests that it has identified issues that cast doubt on ReshaMandi’s future prospects.
Source: Entrackr
