boAt’s IPO Dream Meets A Storm: Can The Brand Stay Afloat?
BoAt's business has scale, brand recall and strong product traction, but none of that will matter unless financial systems are tightened and credibility restored.
Imagine Marketing, BoAt’s parent company's long-awaited stock market debut was expected to be one of India’s most exciting consumer-tech IPOs. The company, known for its affordable earphones, smartwatches and charging accessories, had built a youth-focussed brand and rapidly climbed to the top of India’s wearables market. But just as the IPO process gathered momentum, a series of troubling disclosures surfaced, not from regulators, not from competitors, but from boAt’s own statutory auditors.
Their findings have raised serious questions about the company’s financial discipline, governance standards and readiness to list on the public markets. With so many red flags now out in the open, the biggest question is no longer how boAt will price its IPO but will it sail at all.
Red Flags Highlighted
The first red flag concerns systemic misrepresentation. Auditors noted repeated lapses in accurate record-keeping for three consecutive fiscal years, fiscal 2023, financial year 2024 and fiscal 2025. Inconsistent data over such a long period suggests more than one-off errors; it points to deeper structural issues in financial controls.
A second concern is the mismatch between financial statements shared with lenders and those recorded internally. These discrepancies, also spanning between fiscal 2023 and 2025, raise doubts about whether the company presented inconsistent versions of its financial health depending on the audience. For a company approaching public markets, such contradictions are alarming.
Questions have also been raised about the use of funds. Auditors observed that short-term borrowings were diverted towards long-term projects, a practice that can distort liquidity and mislead stakeholders about actual working capital needs. This, combined with broader concerns around fund utilisation, suggests gaps in oversight.
The company and five associated entities reported operational cash losses across multiple years. The parent firm posted cash losses in fiscal 2023 and financial year 2024, the joint venture Califonix Tech and Manufacturing saw losses in fiscal 2023, associate Kimirica Lifestyle incurred losses in fiscal 2023 and financial year 2024, subsidiary Dive Marketing posted losses in the last financial year, and HOB Ventures reported losses in fiscal 2023 and financial year 2024. While start-ups often burn cash, sustained and widespread losses across the group indicate pressures that may not be immediately visible in headline revenue growth.
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Compliance concerns add another layer of risk. Auditors highlighted lapses in financial discipline, including director remuneration that exceeded limits laid out in the Companies Act. This not only signals weak governance but may also prompt regulatory scrutiny.
Material uncertainty has also been flagged regarding the ability of two subsidiaries, Kaha Pte. Ltd and Imagine Marketing Singapore Pte. Ltd, to meet existing liabilities for fiscal 2023 and fiscal 2024. Such concerns can complicate group-level financial consolidation and impact investor confidence.
Operationally, the auditors found that the company lacked proper backup systems for electronic financial records on physical servers in India. Moreover, physical verification of assets was not carried out, making the reliability of the asset base questionable.
Perhaps most concerning is that several known issues were left uncorrected and merely disclosed in the IPO filing, a move that may be technically compliant but signals hesitation to address underlying weaknesses.
boAt's IPO
These revelations come at a crucial time for boAt’s IPO plans. The company, Imagine Marketing, has proposed a Rs 1,500 crore issue, including a Rs 500 crore fresh issue and a Rs 1,000 crore offer for sale.
In the OFS, promoters and early investors including Aman Gupta (Rs 225 crore), Sameer Ashok Mehta (Rs 75 crore), South Lake Investment (Rs 500 crore), Fireside Ventures (Rs 150 crore) and Qualcomm Ventures (Rs 50 crore) are set to partly exit.
The company plans to use the fresh proceeds worth Rs 225 crore for working capital, Rs 150 crore for brand and marketing efforts and Rs 125 crore for general corporate purposes.
These are sensible allocations for a consumer-tech brand aiming to scale. But investors must now weigh these ambitions against the governance and compliance concerns highlighted by auditors.
The big question for the market is whether boAt can address these flaws in time. The business has scale, brand recall and strong product traction, but none of that will matter unless financial systems are tightened and credibility restored. The IPO may still set sail, but only after the waters are calmer and the ship is structurally sound.
