ReshaMandi laying-off employees; website shutdown, auditor resigned: Reports

According to people close to the company, ReshaMandi’s journey appears to have come to an end as the company has let go of every employee, according to media. Notably, the website of the company backed by Creation Investments has been unavailable for the past week due to the resignation of its auditor.

“It’s all over for ReshaMandi,” said one of the sources requesting anonymity. “The company is struggling to pay liabilities and bear operational costs including salaries for the past several months.”

Among other corporate governance problems, ReshaMandi has been involved in revenue inflation and fraudulent invoices.

The regulatory filing obtained from the Registrar of Companies (RoC) reveals that its auditor, Walker Chandiok & Co LLP, which also resigned last month, brought to light a few concerning issues.

The founder and CTO of the company, Saurabh Kumar Agarwal, was said by the auditor to have acknowledged the financial difficulties of the company, which included staff reductions, operational downsizing, and an inability to support the audit firm’s efforts to finish the financial statements for FY23.

ReshaMandi owes the auditing firm Rs 14.16 lakh for rendered services, according to filings. The Bengaluru-based business also hired Suresh Kapoor & Associates as a new auditor towards the end of July.

Chief financial officers (CFOs) at ReshaMandi also resigned one after the other. The company replaced Ritesh Kumar as group CFO in April 2023 with Samadrita Chakravarty, a former CFO at KPMG. From March 2022 to January 2023, Kumar held the position of CFO. Chakravarty also left the company in October of last year, according to an Inc42 report.

A ReshaMandi spokesperson said, “ReshaMandi is facing some financial difficulties and has streamlined its staff, operations and processes to focus on collecting its pending receivables from the market. We continue to believe in coming out of this situation strong and be able to get back on track soon.”

Mayank Tiwari, a co-founder of the business, declined to specifically respond to a question regarding the layoffs.

More than $50 million has been raised by ReshaMandi, including a $30 million Series A round in October of 2021. It also started a fresh round of funding in June 2022, and in November of the same year, it raised a $6.2 million debt. Investors in the company include Northern Arc, Innoven Capital, 9 Unicorns, Creation Investments, Omnivore, and Stride Ventures.

According to media reports, it was purportedly in discussions to raise $5 million at a substantially lower valuation in order to pay employees’ arrears. Nevertheless, the agreement never came to pass.

Regardless of how dubious the market may have been of the company’s figures; the decline is shocking for a company that projected to generate gross revenues of Rs 1,900 crore in FY23. It appears that Reshamandi’s operating market realities and subpar procedures burned them after they aimed too high in search of a higher valuation. This is a constant existential risk for any startup that is chasing growth solely for the next round of funding and higher valuation: Temasek, the potential investor, could decide to pull out or wait it out.

Even though some would argue that investors themselves usually drive the entire process for the next round and valuations. Even though it might mean the end of ReshaMandi, Temasek has obviously seen something that has persuaded it to take a break.