PwC finds financial inconsistencies: Medikabazaar CEO resigns

• Medikabazaar, the Mumbai-based, ed-tech medical supplier which raised funding of $65 million in April 2022 is in the midst of a corporate storm.
• The CEO and Founder Vivek Tiwari have reportedly stepped down as Big 4 Auditor PwC finds financial inaccuracies in the revenue recognition process. 
• The board is currently on the lookout for a new chief executive.

Executive Reshuffle at Medikabazaar

Medikabazaar, a prominent B2B startup in the medical supplies sector, is experiencing a significant management reorganization.

Co-founder and CEO, Vivek Tiwari has reportedly stepped down from his role.

PwC Audit Reveals Discrepancies

Surprisingly, this development took place while the Mumbai-based company was undergoing a comprehensive audit conducted by PwC.

According to various sources, the audit, now in its final stages, has uncovered discrepancies in Medikabazaar’s revenue recognition process, among other issues.

While conducting data validation, the PwC auditors found that the gross merchandise value had been overstated by a minimum of 60%., as reported by The Arc.

“For a marketplace, revenue is the commission it makes on each sale. This and other discrepancies were found and are being fixed right now. The audit report is being finalised and will be submitted to the board and investors soon,” a person aware of the matter told The Economic Times.

Board’s Response and New Leadership Search

In light of these developments, Medikabazaar’s board is actively seeking a new CEO.

The company spokesperson confirmed that they are in the process of onboarding a senior professional management team to support the business.

The company, valued at $650 million, is considering transitioning Tiwari to a board role.

Also read: Deloitte steps down as Auditor for Byju’s, as the company grapples with legal and debt repayment issues

Strengthening Internal Controls

Following the external review, which revealed weaknesses in internal control and processes, Medikabazaar has taken steps to reinforce its executive team and strengthen its internal control mechanisms.

The board continues to work closely with management to implement necessary changes in processes and systems.

About the company

In 2014, Ankit Tiwari and Ketan Malkan co-founded Medikabazaar, a renowned B2B healthcare solutions provider, headquartered in Mumbai.

Their e-commerce platform offers medical supplies for healthcare institutions, clinics, and individual practitioners.

Ketan Malkan served as the company’s Chief Financial Officer until July of 2023 when he transitioned to a position on the board.

Revenue

Medikabazaar’s revenues from operations in FY23 reached Rs 1,552 crore, marking a 2x increase from the previous year’s Rs 564 crore.

Despite this, the company incurred a loss of Rs 20.8 crore in FY23 following two years of profitability.

Also read: Expectation from Auditors are rising… But India is one of the lowest audit fee markets

Leadership

Founder and CEO – Vivek Tiwari

CFO – Raman Chawla

Group COO – Ravishankar Gopalakrishnan

CTO – Vishal Chaturvedi

CHRO – Sandeep N Gandhi

Medikabazaar’s valuation reached $650 million after securing $65 million in Series D funding in April 2022.

In total, the company has raised $194 million as of now, as reported by the research platform Tracxn.

Backed by notable investors

The 10-year-old ed-tech firm is supported by some prominent investors namely,

1. Lighthouse Funds
2. Creaegis
3. CDC Group (now British International Investment)
4. Kois Invest
5. Rebright Partners
6. MITSUI SUMITOMO INSURANCE Venture Capital (MSIVC)
7. The Catalytic Impact Foundation (CIF)
8. Ackermans & van Haaren
9. HealthQuad

Also read: NFRA imposes INR 2.15 Crore fine on 2 Auditors and 1 Audit Firm for Coffee Day Global Audit Failure

Recent appointments

Medikabazaar has recently undergone significant leadership changes.

Ravishankar Gopalakrishnan joined the company in April 2024 as Group Chief Operating Officer and Whole-time Director. He was formerly the acting CEO of Jet Airways and a senior executive at GE Healthcare.

In May 2024, both Gopalakrishnan and Raman Chawla, who had been serving as Chief Financial Officer since July 2023, after taking the rein from Ketan Malkan, were appointed to the company’s board of directors.

Chawla previously held the roles of CFO at Campus Activewear and Finance Director at Reckitt Benckiser among others.

The board now includes representatives from Medikabazaar’s investors, including Pinak Shrikande from HealthQuad, Nitish Bandi from Creaegis, and Jens Van Nieuwenborgh from Ackermans & van Haaren.

Medikabazaar’s Future Outlook

Despite the turmoil, Medikabazaar promoters are confident in the company’s financial stability and commitment to customer service.

The recent adjustments, led by the board and investors, signal a move towards enhanced governance and operational efficiency.

These changes will shape Medikabazaar’s future success, and their results will unfold over time.

Wrapping up

This development has raised concerns about the company’s financial practices and internal controls.

Investors have become more selective when pouring money into startups.

In recent times, many startups that have received funding from venture capitalists have been subjected to audits mandated by investors.

Medikabazaar’s position is a clear example of a need for stronger governance and ethics.

Source: The Economic Times