Auditors Flag Major Red Flags in boAt IPO Papers — From Mismatched Books to Governance Concerns

As the homegrown audio and wearables brand boAt gears up for its much-anticipated initial public offering (IPO), a closer look at its draft red herring prospectus (DRHP) reveals several red flags that have gone largely unnoticed in mainstream coverage — even those explicitly raised by the company’s own auditors.

When a company goes public, the expectation is simple: full transparency and financial discipline. An IPO is, after all, a request for public money — and investors deserve to know if the house is in order. However, boAt’s filings suggest otherwise, with multiple concerns emerging from its “Risk Factors” section.

boAt IPO: What's Cooking

Red Flag 1: Discrepancies Between Books and Bank Filings

For three consecutive fiscal years (FY23, FY24, FY25), boAt’s auditors noted a fundamental inconsistency.

According to the DRHP, “the quarterly returns or statements filed with banks or financial institutions were not in agreement with the books of account of our Company.”

In simpler terms, the financial information shared with lenders did not align with the company’s own internal records — a basic but serious accounting lapse. This kind of mismatch raises questions about the accuracy of reporting and the robustness of financial controls within the organization.

Red Flag 2: Asset-Liability Mismatch

The auditors also highlighted another critical issue for FY23 and FY24: the company’s use of short-term funds for long-term purposes.

This practice, often seen as a fundamental financial misstep, can create liquidity risks. Using short-term borrowings to finance long-term investments means that if lenders demand repayment, the company may struggle to meet its obligations on time.

Such a mismatch indicates either a lack of understanding of financial management or a worrying disregard for prudent corporate finance practices.

Red Flag 3: Excessive Director Remuneration

The third major concern flagged by auditors relates to excessive remuneration paid to directors.

For FY23, boAt reportedly paid its directors more than the permissible limits under Section 197 of the Companies Act, 2013. This isn’t merely a technical violation — it signals weak internal governance and oversight mechanisms at the top level.

A Pattern of Weak Internal Controls

Taken together, these issues paint a troubling picture. The repeated “unfavourable remarks” from auditors point to more than just isolated mistakes — they suggest a pattern of weak internal controls and a casual approach to compliance.

If auditors themselves are flagging such inconsistencies, it becomes difficult for prospective investors to fully trust the company’s financial disclosures.

Investor Takeaway

boAt’s IPO is built on financials that its own auditors have described as inconsistent or non-compliant in key areas. The company’s apparent governance lapses and accounting irregularities raise an important question for potential investors:

Can you trust the numbers in an IPO when the company’s own records don’t align with its bank filings?

For a company aspiring to join the public markets, such issues reflect a worrying lack of discipline and financial control.

As always, potential investors should exercise caution and evaluate the disclosures thoroughly before making any investment decisions.

Disclaimer: This article is based on a LinkedIn post written by Jayant Mundhra a startup ecosystem expert. The views, opinions, and allegations expressed herein belong solely to the author of the original post and do not necessarily reflect those of TICE or its editorial team.