FirstCry Founder Questioned For Alleged $50 Mn Tax Evasion

The tax department is probing Supam Maheshwari, the founder of three Indian unicorn companies — FirstCry, GlobalBees, and Xpressbees — over allegations of tax evasion.

According to a source cited by Bloomberg, the department has issued notices to Maheshwari, inquiring why he failed to pay over $50 Mn (around INR 413.17 Cr) in taxes on equity transactions involving kids-focused ecommerce unicorn FirstCry.

Besides Maheshwari, at least six FirstCry investors, including private equity firm ChrysCapital and Sunil Bharti Mittal’s family office, have also received enquiries on the matter from the tax department.

Maheshwari is in conversations with the department to settle the probe, the report said.

The development comes just days after FirstCry completed an equity transaction worth INR 435 Cr, which saw SoftBank sell shares to Ranjan Pai’s MEMG Family Office, Marico’s Harsh Mariwala’s investment office Sharrp Ventures and the DSP family office of Hemendra Kothari.

While the ecommerce unicorn had planned for a $1 Bn IPO in 2022, muted market response to other tech stocks dissuaded the ecommerce unicorn. However, multiple SoftBank officials have indicated that FirstCry will be going for an IPO in 2024.

Right now, the Japanese investment major is trying to bring its shareholding in FirstCry below 25% via secondary shares to avoid being nominated as a promoter in its IPO.

In FY22, FirstCry posted a loss of INR 78.7 Cr, even as operating revenue jumped 50% to INR 2,401.3 Cr from INR 1,602.8 Cr in FY21. In FY21, FirstCry posted a profit of INR 215.9 Cr. FirstCry, including all its subsidiaries, is estimated to have a consolidated revenue of over INR 5,000 Cr in FY23, growing by around 45% from FY22, according to the company’s filings.