The founder of Smaaash Entertainment alleged that as many as 82 employees tendered their resignations this month due to multiple cases of harassment
Morakhia has also alleged that Smaaash’s CEO Shirish Kotmire conspired with the company’s resolution professional to get significant pay hikes
According to a former employee, Amin has been taking “undue advantage of cash flows” in the company
The founder and former promoter of gaming startup Smaaash Entertainment, Shripal Morakhia, has reportedly raised allegations of professional misconduct and harassment of employees against the company’s resolution professional (RP).
Morakhia alleged in emails that 82 employees tendered their resignations this month (March) due to the alleged harassment, which include the filing of multiple legal cases against the employees, according to a report filed by Mint.
Smaaash was established in 2012 by film director and producer Morakhia as a gaming arcade operator that had multiple digital entertainment centres for football, cricket, go-karting, and other such recreational activities.
The reports of Smaaash going bust emerged in 2020 as the startup was hit by multiple Covid-19-induced lockdowns. Before the startups shut down for 18 months, Smaaash was in the second spot after Nazara Technologies in terms of total funds raised.
However, after the pandemic-led restrictions were lifted, the startup’s revenue started improving. The Sachin Tendulkar-backed company was admitted for insolvency in May 2022 by the National Company Law Tribunal (NCLT) after a default of INR 292 Cr to Edelweiss Asset Reconstruction Company. Bhrugesh Amin was appointed as the RP in the startup.
Besides harassment of employees, as per the publication, Morakhia has also raised allegations of other corporate governance issues in the company. He alleged that Smaaash’s CEO Shirish Kotmire conspired with Amin to get significant pay hikes.
Kotmire was appointed as the CEO of the company in February last year.
“Firstly, your CEO has ditched his organisation that seconded him to Smaaash. He surreptitiously and in connivance with the resolution professional last year increased his salary from INR 8 Lakh in May to INR 14 Lakh in June to a further INR 20 lakh in July,” Morakhia alleged, as per the report.
Morakhia has also alleged that Amin has been misusing the firm’s cash flows and he has not received any response from the company after repeated requests for a meeting with the lenders and the RP.
While Inc42 couldn’t contact Amin for his statement on the matter, an email to Kotmire did not elicit a response till the time of publishing the article.
Meanwhile, a former employee also told the publication that Amin has been taking “undue advantage of cash flows” in the company and using it to create a plethora of consultants on whom the company’s money is being wasted.
Morakhia also alleged that the money is being wasted on paying the RP and legal fees. “The reason Smaaash had been taken to NCLT is that Edelweiss and AHA (a Morakhia-promoted holding firm) has not been able to settle [the issue] amicably, for which I offered a number of solutions,” he said.
Smaaash’s investors included the likes of Sixth Sense Ventures, Avendus Capital, and some major high-net-worth individuals (HNIs).
Currently, Smaaash has a presence across more than 20+ cities in India, including Bengaluru, Mumbai, Hyderabad, Delhi-NCR, Madurai, and Siliguri.