Exclusive: Mojocare board to discuss audit report, may consider shutting shop: sources

According to people briefed on the contents of the final forensic report, the founders have been found to have inflated revenues and sales in internal presentations to investors, and shown elevated expenses as well (to explain the losses in spite of the higher revenues). The findings are similar to the draft note earlier shared with investors, which ET had reported on June 20.

In the next meeting, currently being planned for July 12, the board will take up the matter of winding down the operations of the startup backed by B Capital and Chiratae Ventures, the sources added.

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“The board is thinking of winding down operations now. However, no siphoning of money by founders for personal gains has been established in the final report,” one of the sources explained.

“While some of the investors also explored a fire sale — like GoMechanic — most investors are backing the idea of shutting the company and returning the remaining capital to the investors’’, another person aware of the matter added. ET had reported that the company had around Rs 80-100 crore left in the bank as of last month.

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Emails sent to Mojocare, its investor consortium, and Deloitte did not elicit any response till press time Tuesday.

The Bengaluru-based startup — founded by Ashwin Swaminathan and Rajat Gupta in 2021 — has raised almost $24 million since inception. It hit the headlines last month after investors uncovered financial irregularities at the firm, which led the company to fire the majority of its employees. Following this, the board asked Deloitte — which was conducting an internal audit — to start a forensic audit on the firm.

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Since the revelations, the company’s operations have come to a screeching halt even as it appointed Ashwani Gupta as the chief financial officer to work closely with the investor consortium.

“They (the founders) were giving a false picture to the investors by tweaking the revenue and expense numbers — till the internal audit asked for explanations’’, one of the sources said.

On June 18, investors in Mojocare said a review of its financial statements had revealed irregularities and that the company was scaling down operations as its business model seemed unsustainable.

Mojocare has become the latest startup in the country to come under the scanner for poor corporate governance, joining the likes of BharatPe, Zilingo, Trell, GoMechanic and Rahul Yadav’s 4B Networks — all of which allegedly had lapses in their financial reporting over the past year. India’s most valued startup Byju’s is also under fire over its key investors leaving the firm along with Deloitte, which resigned citing a delay in getting the edtech’s financials for fiscal 2022, which it was supposed to audit.