Mojocare shut down operations following audit report

The board of troubled startup Mojocare is set to convene later this month to discuss the company’s future, following the submission of the final audit report by Deloitte. Sources familiar with the matter revealed that the founders of Mojocare, who admitted to inflating revenues last month, have been found to have manipulated internal presentations to investors by inflating revenues and sales while also exaggerating expenses to account for the apparent losses. These findings align with the draft note previously shared with investors.

In the upcoming meeting scheduled for July 12, the board will consider winding down the operations of the startup, which had received backing from investors such as B Capital and Chiratae Ventures, according to the sources.

Although the final report did not establish any diversion of funds by the founders for personal gain, the board is contemplating shutting down the company and returning the remaining capital to the investors, as per one source. Reports indicate that Mojocare had around Rs 80-100 crore left in its bank accounts as of last month.

Emails sent to Mojocare, its investor consortium, and Deloitte have not received any response at the time of this press release.

Founded in 2021 by Ashwin Swaminathan and Rajat Gupta, the Bengaluru-based startup has raised approximately $24 million since its inception. Last month, the company made headlines when investors uncovered financial irregularities, leading to the termination of employment for a majority of its staff. Subsequently, the board requested Deloitte, which was conducting an internal audit, to initiate a forensic audit of the company.

Since the revelations, Mojocare’s operations have come to a halt, and the company appointed Ashwani Gupta as the chief financial officer to collaborate closely with the investor consortium.

According to sources, the founders provided false information to investors by manipulating revenue and expense figures until the internal audit demanded explanations.

Mojocare joins the growing list of Indian startups under scrutiny for poor corporate governance, including BharatPe, Zilingo, Trell, GoMechanic, and Rahul Yadav’s 4B Networks, all of which allegedly had lapses in financial reporting over the past year. India’s most valued startup, Byju’s, has also faced criticism as key investors departed the firm, and Deloitte resigned due to a delay in receiving the edtech company’s financials for fiscal year 2022, which it was supposed to audit.