The fallout of a forensic audit: Medikabazaar founders set to lose stock options

livemint.com:

MUMBAI : Medikabazaar’s founders Vivek Tiwari and Ketan Malkan may not be awarded the stock options due to them this year as a fallout of financial discrepancies that have surfaced in yet another instance of corporate misgovernance among Indian startups. The company’s board is contemplating cancelling the management stock options that were due to the founders at the end of June, expecting Medikabazaar to not meet its revenue and operational earnings targets for 2023-24, according to three people familiar with the deliberations.

The medical-technology company had to correct its revenue for 2023-24 after a forensic audit commission by its board unearthed evidence that the company had inflated its revenue by 60-65%, two of them said. The audit had followed a whistleblower complaint to Medikabazaar’s board last year alleging round-tripping of accounts resulting in inflated revenues and other irregularities such as unreported related-party transactions.

Medikabazaar’s board of directors, led by a nominee of private equity firm Creaegis, the largest shareholder in the company, then commissioned an undisclosed firm for the audit. Also read | Forensic auditors knock at startup doors as edgy investors look to fix issues early Medikabazaar joins a growing list of Indian startups that have faced governance issues.

Companies such as Trell, BharatPe, Byju’s, and GoMechanic have faced audits from jittery investors over the past two years. A spokesperson for Medikabazaar said “there has been no change in the shareholding of Medikabazaar" and that “Vivek Tiwari continues to serve as the CEO of Medikabazaar".

Tiwari and Creaegis did not respond to Mint’s queries. Tiwari and Malkan were due to receive 5-8% equity as part of their