boAt Auditors Flag Major Financial Red Flags Ahead of IPO

boat, which is preparing for its IPO, disclosed in its updated draft prospectus that its statutory auditors found several mismatches between the quarterly statements it submitted to lenders and the figures recorded in its own books.

Imagine Marketing, Boat’s parent company, revealed that auditors had issued several “unfavourable remarks and observations” over the years. These issues — found in FY23, FY24, and FY25 — showed that the statements Boat submitted to banks did not match the company’s own internal financial records.

The Gurugram-based company, now making its second attempt at an IPO after pulling back in 2022, also said its auditors flagged concerns about how funds were used. According to the disclosure, money raised for short-term needs was instead used by one of its subsidiaries for long-term purposes in FY23 and FY24.

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Boat’s IPO prospectus has faced heavy scrutiny on social media, with many users pointing out operational issues. The updated DRHP also shows that the company failed to report certain transactions made to its Singapore subsidiary, Kaha Pte Ltd, through another unit — Imagine Marketing Singapore — during FY23 to FY25.

The auditors also found that Boat paid its directors more than the permitted limit under the Companies Act in FY23.

Boat did not respond to queries sent on Wednesday.

In its updated DRHP, the company said it has taken steps to fix some of the issues raised by auditors, including filing revised financial statements.

“Our company took steps to rectify some of the observations which included obtaining a waiver, through shareholders’ resolution for the excess remuneration paid to directors of our company and ensuring that accurate numbers are reported from the current financial year to minimise the differences between the books and returns,” the startup said.

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In the first quarter of the current fiscal year, Boat reported operating revenue of Rs 628 crore, an 11% increase from last year. It posted a net profit of Rs 21 crore for April–June, compared to a net loss of Rs 31 crore in the same period a year ago.

For FY25, the company recorded a net profit of over Rs 60 crore, reversing a net loss of Rs 80 crore in the previous year. Boat credited this turnaround to product innovation and cost control. Consolidated revenue dipped slightly to Rs 3,098 crore from Rs 3,122 crore in FY24.

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