[Update] Sacked Medikabazaar Founder Vivek Tiwari Denies Fraud Allegations

Update | April 18, 20:38 PM

A day after it was reported that Medikabazaar removed its founder and former CEO Vivek Tiwari from its board after an investigation found financial fraud, Tiwari has denied any wrongdoings. 

In a statement sent to Inc42, Tiwari said, “… I categorically deny all allegations of fraudulent conduct or intentional misrepresentation during my tenure as CEO. The claims suggesting my involvement in any alleged inflation of revenue figures are misleading, and do not reflect the reality of the situation.” 

According to him, under his leadership, Medikabazaar scaled rapidly while delivering significant impact in the healthcare sector. 

“While the current narrative is unfortunate and deeply damaging, I remain confident in the truth. In the coming days, true facts will emerge, providing clarity and reaffirming my personal reputation and integrity. Any attempt, intentional or otherwise, to malign my character and reputation will be addressed through appropriate legal channels, as and when necessary,” he added.

Original | April 17, 19:30 PM

B2B healthcare supply chain startup Medikabazaar has removed its founder and former CEO Vivek Tiwari from its board after an investigation found financial fraud.

According to the startup’s regulatory filing, Tiwari was involved in “malicious and fraudulent activities” that harmed the startup. He was accused of breaching trust, misusing company funds, and acting with gross negligence.

The probe was carried out by Uniqus India, Alvarez & Marsal, and law firm Rashmikant & Partners. 

The probe followed concerns raised by PwC earlier. The firm reportedly found that the startup’s revenue for FY23 was overstated by over 50%. Medikabazaar reported $181 Mn in revenue that year, nearly double the previous figure, mainly by inflating gross merchandise value.

The development was first reported by The CapTable.

Further, he said “While the current narrative is unfortunate and deeply damaging, I remain confident in the truth. In the coming days, true facts will emerge, providing clarity and reaffirming my personal reputation and integrity. Any attempt, intentional or otherwise, to malign my character and reputation will be addressed through appropriate legal channels, as and when necessary.”

Tiwari stepped down from the role of CEO in 2024 but stayed on the board until now. He has been replaced by Dinesh Lodha, who was earlier the country head of Samsung India.

Separately, the startup is also facing legal and tax troubles:

• Investors’ Indemnity Claim: The startup’s Series C investors have filed an indemnity claim of INR 278.7 Cr for earlier financial misreporting. However, Medikabazaar said it has been legally advised that it has a reasonable case to not accept the claim.
• Income Tax Issues: The income tax department searched the startup’s office in June 2022. It has received multiple tax notices, including a INR 2.5 Cr demand for FY22, which it paid under protest.
• Audit Concerns: Auditors have also issued a qualified opinion due to missing records for assets and inventories worth over INR 80 Cr. Some subsidiaries were unaudited despite large losses. Internal financial controls were found to be poor, raising risks of further errors or fraud.

Behind The Troubles At Medikabazaar

Medikabazaar is a B2B platform for medical supplies. It was once valued at $650 Mn when it raised $65 Mn in 2022. It has raised $194 Mn to date from investors like Creaegis, Lighthouse India, HealthQuad, Rebright, and Ackerman. Its competitors include Aknamed, IdeaRX, Knya, Drstore, and Single Dose.

Tiwari stepped down as Medikabazaar after PwC found serious issues in the startup’s revenue reporting and governance. At the time, the audit revealed that the startup’s gross merchandise value (GMV) was overstated by at least 60%.

At the time, it was reported that the company sold the same products multiple times via different entities.

Following this, the startup was said to have admitted to weak internal controls and began restructuring its leadership. While Tiwari was moved to a non-operating board role and replaced by Lodha as the CEO, Medikabazaar cofounder Ketan Malkanlal, who left the CFO role in 2023, remains on its board.

Medikabazaar is yet another addition to the list of Indian startups which have seen corporate governance lapses in recent times. While the recent crisis at Gensol has put the future of BluSmart at stake, the likes of BharatPe, GoMechanic, SustainKart, among others, were among the other notable names which were in the news for these lapses over the last few years.