Unmasking Kult: How Rahul Yadav’s Web Swallowed The Beauty App

What’s in a name? In the case of Karishma Singh’s beauty app Kult, the name is a premonition — it hints at the cult of personality or the figure in the background pulling the strings.

Of course, for anyone who has seen the journey of the Indian startup ecosystem up front through the past decade, this figure is anything but shadowy. Rahul Yadav, the spouse of Karishma Singh, is in the thick of things once again.

Yadav’s gravity and tainted reputation after the Housing.com and Broker Network debacle pushed Kult far from its orbit into a catastrophic situation.

Even as Kult claimed a $20 Mn infusion supposedly from M3M family office and Venture Catalysts last week, Inc42’s investigation has uncovered many gaps in the Kult story, as well as allegations of Yadav using Kult to move funds around for business associates.

Indeed, as we will see in this deep dive into Kult, the startup was deeply influenced by the course of Info Edge-backed Broker Network.

The Kult Collapse

Having launched operations in 2022, Kult quickly built up a loyal audience with the lure of heavily discounted products. The first two years saw the company grow its user base beyond 4 Lakh, and at one point, Singh claimed that the beauty marketplace was doing 40,000 orders per month.

But sources allege this was only possible because of Kult’s involvement in the web of companies allegedly at the centre of the Rahul Yadav and Broker Network saga during 2022 to 2024.

Just as the Economic Offences Wing investigation into Broker Network began in 2023, Kult’s growth story crumbled. It suddenly found itself without the funds needed to purchase inventory and its splurging on employees, perks, shoots and models stopped.

Beauty giants such as Estee Lauder, Huda Beauty and numerous smaller D2C brands and creator-led businesses were left with unpaid dues from Kult. Key employees who were promised hefty bonuses and variable pay for meeting targets were also left in the lurch, and salaries have not been paid for months.

Worse, the company had not paid its income tax dues for employees, leaving them exposed to potential legal action from the tax authorities. Overall, Kult owed more than INR 40 Cr across all these dues.

So when it announced a $20 Mn infusion last week, the brands, vendors, employees and everyone else Kult owed money should have rejoiced.

But as it turns out, Kult is not just a beauty app. It’s akin to a smoke-and-mirrors game or a set of matryoshka dolls or an onion with numerous layers.

These are not analogies that typically live together, but in the case of Kult, all three are equally applicable. To understand this, we need to get deeper into the origin.

Through information received from sources that worked directly with Karishma Singh and Rahul Yadav, as well as documents pertaining to Kult’s fundraise plans and audits, Inc42 is now able to present an even clearer picture connecting these companies.

At the heart of it all is Rahul Yadav’s RY Management LLP (formerly known as RY Advisory LLP), which seems to be the bridge connecting Broker Network and Kult.

Kult’s Nested Doll House

One might find it odd to talk about history when Kult is just three years old in terms of operations, but this is not a story of one company. Kult was actually set for launch in 2017 when Karishma Singh incorporated Kult Cosmetics Private Limited (known as Kult Cosmetics).

Unfortunately for Singh, that launch never happened. She told Inc42 last week that it had been her personal dream to launch an innovative beauty platform that actually disrupted through tech and not just discounts or SKUs.

In fact, in May 2021, Kult Cosmetics Private Limited was officially renamed to Aceuser Private Limited. Incidentally, this was six months after the incorporation of Broker Network through 4B Networks Private Limited. But Karishma Singh and Devesh Singh also incorporated Kult App Private Limited (called Kult App) just a few days before Aceuser came into the picture.

Aceuser Private Limited, as we reported in 2023, is very likely a link in the alleged embezzlement and fraud being investigated by the Economic Offences Wing (EOW), with Rahul Yadav, Karishma Singh’s brother Devesh Singh and their business associate Pratik Choudhary being named as accused.

So the first stint for Kult from 2017 to 2021 was one that never happened.

It was only after 2021 that the app began operations. This can be called the Kult 2.0 phase, till a third company was spawned by Karishma Singh and Devesh Singh in 2024 — Kult E-commerce Private Limited (Kult Ecommerce, phew!).

This most recently incorporated company claimed to have raised $20 Mn from the M3M family office and Venture Catalysts.

However, a Venture Catalysts spokesperson told Inc42 that it has not invested in Kult. The M3M family office did not respond to questions about the deal.

Essentially, Kult, which was meant to be run by Kult Cosmetics at one point, was then run by Kult App and will now be run by Kult E-commerce — like the matryoshka nested dolls. That’s if the funding has indeed come in.

The Smoke And Mirrors

Let’s step back a little to the business that came before the most recent avatar.

In April 2021 — after the incorporation of Kult App — Karishma Singh finally launched the beauty app that she had been working on for years. But, curiously, Kult chose to go to market only riding an iOS app.

This is a tiny sales channel for most Indian ecommerce startups in the initial days. Most consumers use Android devices, and many of which would not purchase from a platform that does not have a web presence of some kind. Kult was a brand new name, but it had discounts going for it, and a great looking app.

Kult also seemed to have got its messaging and brand building campaigns right, but it did come at a steep cost.

Singh told Inc42 that it was a deliberate choice to test the waters with iOS only and built on the thesis that those using iPhones might have a higher propensity to spend on international beauty brands. The orders started rolling in and soon Kult even had a large team running the show. The first year was seriously slow, but it changed in FY23.

In FY22, the company only raked in INR 2.2 Lakh in revenue with total spending of over INR 8.1 Cr, almost all of it trickling down to net losses. In FY23, the revenue improved to INR 2 Cr, but losses surged nearly eight-fold to INR 60.3 Cr.

This begs the question — having burnt close to $1 Mn in capital in the first year, how did Kult get the capital for the second year of operations?

Cofounder and CEO Singh told Inc42 that Kult raised a round from friends and family in 2021 as seed money. This helped it clinch deals with various brands including the likes of Huda, Estee Lauder and others, and she claimed that many of these brands were happy to enter India through Kult. However, multiple sources we spoke to disputed this.

“There were no legitimate investors initially. It was always RY [RY Advisory] providing funds. We used to discuss the involvement of RY, and Karishma and Rahul would argue that external investors would limit operational flexibility. We had one meeting with a VC firm in Mumbai, but they listened to us for 10 minutes and showed little interest in investing,” a former Kult exec told Inc42.

We were also told that the first round of external funding only happened after 2023.

Many former employees today have bitter memories of Kult, but in the early days, there was a lot of excitement.

“There was a lot of freedom to onboard brands and try out different activation campaigns to bring users on board. We really cracked the influencer game too, which was not something most new brands could do,” said a former employee who spoke to Inc42 on the condition of anonymity.

Even after the INR 70 Cr ($9-10 Mn) loss till FY23, Kult was alive without even a single institutional investor.

In FY24, the company reported INR 7.5 Cr in revenue, as per unaudited financials seen by Inc42. With total expenses of INR 60.5 Cr, Kult reported a loss of INR 53 Cr at the end of March 2024.

Cumulative losses had touched INR 121.3 Cr after the first three fiscal years and the revenue had barely reached INR 10 Cr. Kult’s social media following and the massive influencer backing were just covering the cracks.

This was not a company that was actually retaining users or building a loyal base — if anything, its spending priorities were on areas that hardly had a direct impact on sales.

Kult spent a staggering INR 16.4 Cr on employee salaries in FY24 for INR 7.5 Cr in revenue — by itself, this is pertinent when we think about allegations of salaries not being paid for some portion of FY24.

In addition, it splurged INR 4.7 Cr on marketing and advertising fees, INR 6.6 Cr on legal and professional fees (without any institutional round in the pipeline one might add), and more than INR 4.2 Cr on rent and another INR 4.7 Cr on software and tech. Close to INR 1 Cr was spent just on photoshoots.

This does not seem sustainable even by the heavy burn standards set by Indian ecommerce players of the past. And, by now, it had actually begun talks with investors to infuse capital, because clearly it desperately needed funds after the staggering INR 120 Cr loss after three years.

Peeling The Onion’s Layers 

In March 2023, Captain Ashish Chandna, CEO of logistics giant Allcargo Logistics, was the first outside investor to step into Kult.

“Ashish Chandna came to the office and spent about half-an-hour speaking to us and understanding the business. Within 10 days, he had decided to invest. He wanted to put in INR 20 Cr to start with,” said one source close to the management.

Between April and December 2023, Chandna is said to have infused close to INR 18 Cr into Kult out of a commitment of INR 20 Cr. In exchange, he was handed over close to 40% of the company. These shares were held by Rush Techmart, a company where Chandna was a director.

At the same time, Kult incorporated a subsidiary named Rush Beauty Mart to manage inventory procurement and sell the stock to Kult, who will eventually sell it to consumers through the app.

With his large stake, Chandna had created a sense of dependency within Kult’s management. We were told that, in essence, he had taken over the day-to-day management and the business, and at least one former employee believes this led to a lot of friction between Chandna and Rahul Yadav.

At this point, we need to clarify that while Rahul Yadav may not have held a formal day-to-day operational title, sources consistently pointed to his influence and intervention in key decisions. “He would routinely instruct us to bring brands on board and ensure their retention, even amid non-payment. He is known to have berated team leaders for their inability to retain employees who were, similarly, not being paid,” one source told us.

Inc42 has seen dozens of WhatsApp chats among Rahul Yadav, Karishma Singh and key employees at Kult who were left without responses for weeks on issues related to salaries, brand payments, bonuses and more.

Chandna’s involvement in the company only grew as he saw the lopsided spending by the business and media teams at Kult. He routinely questioned the company’s need to pay for fancy office spaces and is said to have told function heads not to stop employees who want to quit.

The friction with Yadav only increased as Chandna grew tired of his relentless demand for a bigger infusion. At one point, Chandna is said to have agreed to give INR 100 Cr for inventory financing in Rush Beauty Mart, and he also committed to investing INR 50 Cr in the Kult App separately.

This was in addition to the original INR 20 Cr commitment of which he eventually invested INR 18 Cr before pulling out.

But Yadav was not ready to let Chandna take over. Former employees who were privy to internal meetings and discussions indicated that Yadav also owed a personal debt to Chandna, which he was trying to square off using funds from Kult.

“Ashish Chandna was explicit about using the funds provided to Kult to clear his outstanding entries with RY Advisory. Pratik [Choudhary] and Rahul [Yadav] orchestrated his involvement. Ashish also insisted that if he invested for inventory financing, certain practices such as exorbitant spending needed to stop,” one employee told us.

The sources added that the disagreements eventually came to a head when Chandna withdrew all investment commitments from Kult after his bank accounts came under an unrelated investigation. This meant that by early 2024, Kult was holding inventories of around INR 15 Cr that it had received from brands.

It was left with two options: Incur some losses on returning the stock to distributors and the brands, or selling them at a steep discount and also look to get some investors on board. It was during this time that Kult seriously began engaging with institutional investors.

An audit was ordered and an internal due diligence was conducted which could be used as a guide for any external due diligence by investors. Inc42 has seen portions of Kult’s DD report by a Mumbai-based CA firm.

It flagged several areas of concern regarding Kult’s financial dealings, including both its borrowings and loans to individuals and corporations. Kult borrowed close to INR 9 Cr from various non-corporate entities.

Additionally, it took loans from corporate entities like Ace Housing and Construction Private Limited, another company that was highlighted in Inc42’s investigative story on Broker Network’s collapse.

Ace Housing and Construction is owned by Danishmand Merchant. Here’s what one of our sources told us about Merchant’s involvement in Kult. “You will find the name Panther on Kult’s shareholding filings. That’s Danish Merchant. But Panther had never actually provided funds. All monthly funding came from RY Advisory, which was managed by Pratik and Rahul.”

As for loans taken from many entities, Kult is yet to complete its full payments.

NBFC Capri Global, which has more than INR 30 Lakh in interest dues on Kult, is one such entity and has filed an NCLT application against the troubled company. RY Advisory is the biggest beneficiary of Kult’s lax lending practices, according to the audit. The Rahul Yadav-owned partnership received more than INR 15 Cr in interest-free loans in FY24 from Kult.

Besides this unregulated lending and borrowing, Kult also owes more than INR 5 Cr in GST and TDS liabilities to the government. This could attract severe punishment for the directors of the company, including, but not limited to, imprisonment.

In terms of overdue salaries, multiple employees we spoke to indicated that the total quantum was in excess of INR 15 Cr. Remember that Kult reported INR 16.4 Cr as spending for employee benefits, what the company did not have to mention was whether it was actually paid.

Most employees we spoke to said salaries had stopped by December 2023 and Kult was in struggle mode with Chandna refusing to infuse any more money beyond INR 18 Cr.

For Karishma Singh and Rahul Yadav, the next step was a repeat of the earlier one: Launch a new company and start over. Just like an onion, there’s always a fresh layer under the dried exterior.

Three Big Questions For Kult App

After winding down Kult App in mid-2024 due to cash crunch, Karishma and Rahul returned to investors with the plan for Kult Ecommerce. Conversations with investors had started even before Kult App went bust.

This is why the company had prepared an internal due diligence report, which laid bare its shady borrowing and lending practices and the extent of statutory dues.

M3M Family Office in Gurugram is said to be the lead investor in the round, which was promoted as a Series A round. The current shareholding structure of the company is unclear, but M3M is said to be the majority shareholder and is likely running the show.

Like many other startups, the new Kult — aka Kult 3.0 — has also hopped on the AI train and is bullish about its implementation within the app.

CEO Singh told us that AI is not just used for creating content or listing pages, but for actual personalisation based on the product and user. She claimed that product descriptions vary for each user and are generated based on their past interactions and purchase history with Kult.

When asked about Kult’s connection to RY Advisory and Rahul Yadav, the founder claimed that there was none. However, Singh refused to respond to Inc42’s follow-up questions on the interest-free loan of more than INR 15 Cr to RY Advisory.

Ultimately, with nearly INR 40 Cr in dues as alleged by sources, Kult App has passed on the app baton to Kult E-commerce. And in this regard, there are three major questions for the management and the founders:

1. But will it also assume Kult App’s dues and liabilities? Will its loans also transfer to Kult E-commerce? Singh did not respond to these questions

2. And then there are the assets. How did Kult Ecommerce simply take control of the Kult marketplace platform? Once again, we were not told how this process took place.

3. By all indications, Karishma Singh did not own the majority shareholding in Kult App, so who authorised the company to transfer its website, domain name, trademark and copyright registration among other licences to Kult Ecommerce?

These are questions that Kult and its investors M3M family office did not respond to. Instead, both have resorted to a press release that claimed that the platform is aiming to reach break even with 10,000 orders per day in the near future.

The press release also had promises of hiring more than 120 employees over the next six to 12 months. Singh has moved base from Mumbai to Gurugram for Kult’s new innings, and the handful of employees that have stuck around after the crisis last year were told to move to Gurugram at an extremely short notice, we were told.

And in her most recent interaction with us, Kult’s Singh denied that Yadav was involved in the new deal. What she failed to mention is that it is an entirely different company, which has somehow taken over Kult.

Former employees of Kult had another very pertinent question: What more is needed for action to be taken against Rahul Yadav and the management of Kult? There are cases filed with a number of courts and investigative agencies, yet employees say there’s no relief for hundreds of people impacted by these actions.

The question, once again — like in the case of BluSmart or Zilingo or BYJU’S or the dozens of other startups that have crumbled — is when will India’s startup ecosystem, investors, and regulatory bodies finally wake up and smell the coffee?

Accountability and corporate governance are always part of the buzzwords when we speak about the startup ecosystem. But the actions indicate a reluctance to come down hard on the alleged bad actors souring the Indian startup story.

Edited By Kumar Chatterjee