boAt IPO: Company Plans ₹1,500 Cr Offer Amid Audit Flags and Compliance Concerns

SYNOPSIS: boAt plans a Rs. 1,500 crore IPO while auditors flag discrepancies between lender submissions and internal records, placing attention on financial controls as the company outlines its intended use of fresh issue proceeds.

The proposed IPO of boAt will consist of equity shares amounting to Rs. 1,500 crore, comprising a Rs. 500 crore fresh issue and a Rs. 1,000 crore offer for sale (OFS). Under the OFS, shares will be divested by several existing stakeholders, including Rs. 75 crore worth of shares from Sameer Ashok Mehta, Rs. 225 crore from Aman Gupta, Rs. 500 crore from South Lake Investment, Rs. 150 crore from Fireside Ventures, and Rs. 50 crore from Qualcomm Ventures.

From the fresh issue proceeds, the company intends to allocate Rs. 225 crore towards working capital requirements and Rs. 150 crore for brand-building and marketing initiatives. The remaining funds will be used for general corporate purposes.

Audit Flags Irregularities: As boAt moves ahead with its public offering plans, its updated draft red herring prospectus (UDRHP) highlights that the company’s statutory auditors have expressed concerns about inconsistencies between the financial details submitted to lenders and the numbers recorded in its internal financial statements.

These observations – disclosed in the DRHP filed by parent entity “Imagine Marketing” a little over a month ago – come at a critical time, as boAt prepares to pursue its second attempt at launching an IPO.

Reporting Gaps during FY23-25: Multiple quarterly financial statements submitted to lenders did not align with the company’s recorded financials for FY23, FY24, and FY25, indicating inconsistencies in reporting, as reported by BSR & Co LLP in an audit report.

Subsidiary-Level Compliance Issues: The audit also highlighted that short-term borrowings were diverted to finance long-term requirements of subsidiaries, signalling broader weaknesses in the company’s internal financial controls during the period under review.

Further, the auditors flagged material uncertainty regarding the ability of two international subsidiaries, Kaha Pte Ltd and Imagine Marketing Singapore Pte Ltd, to meet their financial obligations in FY23 and FY24.

Additional observations included delays in statutory payments, non-compliance with mandatory audit-trail norms at certain subsidiaries, insufficient data backup practices, and gaps in physical verification of plant and equipment during FY23.

They also reported that director remuneration exceeded the permissible limits under the Companies Act in FY23, though the company subsequently regularised the payments through shareholder approval.

boAt stated that it has implemented corrective measures, including reconciling mismatched financial data, upgrading its accounting systems to meet regulatory requirements, and obtaining the necessary approvals. Despite these efforts, the auditors noted that they cannot assure that similar lapses will not recur, emphasising the need for more robust internal controls going forward.

The prospectus also outlines the broader market context in which the company is preparing to list. While boAt has returned to profitability after two consecutive years of losses, it continues to face a highly competitive landscape in the wearables and audio accessories segment, marked by intense pricing pressure and slowing market growth.

boAt currently works with more than 115 third-party service centres in India and has an operational footprint extending to the Middle East and South Asia. The company has manufactured over 7.5 crore units domestically, with India contributing 75.83 percent of total production in Q1 FY26. As of FY25, its parent company, Imagine Marketing, held a 26 percent market share by value and 34 percent by volume.

Written by Shivani Singh

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