MobiKwik Faces Criminal Case For Non-Payment Of Dues To A Vendor

Even as MobiKwik gears up to raise INR 700 Cr from public markets, the fintech startup is grappling with a legal case involving alleged non-payment of dues to a vendor. 

As per MobiKwik’s draft red herring prospectus (DRHP), a complaint has been filed against the startup and its directors – Bipin Preet Singh, Chandan Joshi, Upasana Taku, Sayali Karanjkar and Navdeep Singh Suri – for their alleged failure to clear 12 invoices. 

“A complaint has been filed by Xplore Private Limited, against our company, and our directors namely Bipin Preet Singh, Chandan Joshi, Upasana Rupkrishan Taku, Sayali Karanjkar, and Navdeep Singh Suri on December 6, 2023 before the court of Additional Chief Judicial Magistrate, Bidhannagar, for the violation of sections 406, 420, read with section 120B of the Indian Penal Code,” read the DRHP. 

The complainant in question, Xplore Private Limited, has dragged the fintech company to court for alleged delays in payments of services provided by it. Xplore claims to have provided services for “managing customer queries over calls and tickets (emails)”.

In its petition, Xplore has alleged wrongful losses due to delays in payments and has pegged the damages at INR 1.61 Cr. The case was filed before the court on December 6, 2023.

“Pursuant to this, the court of Additional Chief Judicial Magistrate has issued a summon against our Company and our directors to appear before the court. The matter is currently pending,” the DRHP said on the case.

The Delhi NCR-based fintech startup filed its draft papers for the IPO with the markets regulator SEBI on January 5, its second attempt to go public. MobiKwik plans to raise INR 700 Cr through a fresh issue of shares. The public issue will not have any offer-for-sale component. 

The company will largely use the proceeds for business expansion, to make investments in AI and ML, among others.

Overall, cofounders Bipin Preet Singh and Upasana Taku together own 32.25% stake in the startup on a fully diluted basis. 

The second largest shareholder in the company is Bajaj Finance which owns 13.44% stake, followed by Peak XV Partners (formerly known as Sequoia Capital) with 13.06% stake.

MobiKwik’s latest attempt to list on the bourses comes more than two years after it first filed its DRHP with SEBI in 2021, which comprised a fresh issue of shares of up to INR 1,500 Cr and an OFS component of up to INR 400 Cr. However, market volatility and dampened investor sentiment forced the company to shelve the plan.

While the market sentiment has improved a lot since then, MobiKwik has also managed to turnaround its financial performance. After reporting losses in almost each of the financial years since its inception, MobiKwik turned profitable in H1 FY24 and posted a PAT of INR 9.4 Cr.

For context, the startup had reported a net loss of INR 83.8 Cr in FY23 and INR 128.1 Cr in FY22.