Imagine Marketing, the parent company of Boat, has disclosed that the auditors over the years had issued several “unfavourable remarks and observations”. The observations over mismatch of its filed statements from its accounts pertained to fiscal years 2023, 2024 and 2025. Simply put, auditors found that the information Boat shared with the banks did not match its own internal records.
The Gurugram-based company, which is making a second attempt at going public after withdrawing an earlier plan in 2022, also said its auditors raised concerns over utilisation of funds for different purposes than what they were raised for. “…funds raised on a short-term basis being utilised for long-term purposes of one of our subsidiaries, for financial years 2024 and 2023,” it said.
The smartwatch and audio device maker’s IPO prospectus has come under intense scrutiny on social media with several aspects of the company’s operations being flagged.
As per the updated DRHP, the company also did not report transactions made into its Singapore-based Kaha Pte Ltd subsidiary through another unit, Imagine Marketing Singapore, between FY23 and FY25.
The auditors found that Boat paid excess remuneration to its directors in the financial year 2023 than the cap set under the Companies Act, 2013, it said.
Queries sent to Boat did not elicit any response till press time on Wednesday.
Responding to these observations in the updated DRHP, the company said it has taken “steps to rectify some of the observations” including filing corrected financial statements.
“Our company took steps to rectify some of the observations which included obtaining a waiver, through shareholders’ resolution for the excess remuneration paid to directors of our company and ensuring that accurate numbers are reported from the current financial year to minimise the differences between the books and returns,” the startup said.
For the first quarter of the ongoing fiscal year, Boat reported operating revenue of Rs 628 crore, up 11% from a year earlier. It posted a net profit of Rs 21 crore for the April-June period against a net loss of Rs 31 crore reported for the same period last year.
The company had posted a net profit of more than Rs 60 crore for fiscal 2025 compared with a net loss of Rs 80 crore the prior year, attributing it to product innovation and cost control. Consolidated revenue declined narrowly to Rs 3,098 crore from Rs 3,122 crore in FY24.
Boat reported an attrition rate of 34% among its full-time employees for the financial year ended March 31, a rise from 28% in the previous year. The company’s attrition has been on the rise since FY23, with 107 employees leaving that year, followed by 132 in FY24 and 161 in FY25.
Recently, Sameer Mehta, cofounder and CEO of Imagine Marketing, moved to the role of executive director, with chief operating officer Gaurav Nayyar taking on the position of CEO. Cofounder Aman Gupta, who was chief marketing officer, has moved to the role of non-executive director.
The company is looking to raise Rs 1,500 crore through the IPO, comprising Rs 500 crore in fresh shares and Rs 1,000 crore by existing investors through an offer for sale, according to the updated prospectus.