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As BharatPe looks to move beyond the controversy that has beset the company from the beginning of the year, the company today said that it will be taking necessary steps to claw back the restricted shares owned by ousted cofounder and former managing director Ashneer Grover.

While BharatPe did not name Grover in its statement, it did mention that it is taking action against the ex-CEO, who is at the centre of the public battle featuring the board, independent director Rajnish Kumar, the current CEO Suhail Sameer as well as the other cofounder Shashvat Nakrani.

“The company has initiated necessary action against the former Founder to claw back his restricted shares as per the shareholders’ agreement. It will take all steps to enforce its right under the law,” the statement said.

Action Against Vendors, Employees

Besides this, BharatPe claimed that it has taken action against certain employees and vendors involved in inflating invoices or incorrectly recording them. The fintech unicorn had appointed risk advisory Alvarez & Marsal (A&M) as well as law firm Shardul Amarchand Mangaldas & Co. (SAM) to lead a governance review, while consulting giant PwC, was roped in to determine wilful misconduct and gross negligence by a former founder.

Following the investigation, the company said it found many vendors “involved in malpractices, such as incorrect or inflated invoices”, who have been blocked from doing further business with BharatPe. The company claimed that some of these vendors were also identified during the GST Enquiry, following which BharatPe paid a fine to the DGGI.

The company said it has issued legal notices to these vendors to recover the amount and will be filing civil/criminal cases against them. Besides this, several employees who were working in departments directly involved with the blocked vendors have been dismissed. The statement does not mention who these employees or which departments were involved, but goes on to add that the company will be filing criminal cases against some of these employees for the alleged misconduct and act of cheating, if required.

BharatPe Eyes IPO

Last month, BharatPe appointed an executive from A&M as the interim chief financial officer (CFO), while also claiming that it will be appointing a full-time CFO ahead of a potential initial public offering (IPO). In its statement today too, the company said it is eyeing an IPO, but declined to answer any further questions about a potential timeline for the public offering.

At the time, independent director Kumar had said the company is planning an IPO within the next 18-24 months. “On IPO also, we are very clear in mind that we go with some positive numbers on profits. There is a path to profitability before you go for an IPO,” the former SBI chief had said at the time.

Looking to improve its corporate governance systems ahead of this IPO, the company has implemented a code of conduct for senior management and employees, which deals with the conflict of interest and other issues that may become a hurdle in the long run.

It has also appointed a full-time chief human resources officer and claims to have set up a new IT infrastructure management policy. Besides this, it claims to have put in place a new vendor procurement policy for on-boarding and engaging with vendors and “mitigate any risk of employees indulging in suspicious transactions to enrich themselves”.

Further, the statement mentions that the company will be conducting a regular internal audit for which it has roped in Mazars India, a global audit firm.

Is The Trouble Over For BharatPe? 

Amid the public battle between Grover and the company’s board, investors and management, even the central government’s Ministry of Corporate Affairs had stepped in through a separate probe, besides BharatPe’s internal reviews.

The MCA was said to be looking at BharatPe’s peer-to-peer lending business, its investments in mutual funds and securities as well as the stake holding of former cofounder Bhavik Koladiya and the stock options offered to some independent directors such as chairman Kumar and Keval Handa.

The ministry had also reportedly sought details about the internal governance and financial review of BharatPe, which the company had claimed was the reason it had sacked Ashneer Grover and his wife Madhuri Jain Grover, who is the former head of controls at the company.

In March 2022, Grover resigned from the board and as managing director of the company, but a day later the fintech giant hit back with allegations of embezzlement, payments to fake vendors and syphoning money away from the company’s expense account by Grover and his wife Jain Grover.

At the time, BharatPe had said “The Grover family and their relatives engaged in extensive misappropriation of company funds, including, but not limited to, creating fake vendors through which they siphoned [sic] money away from the company’s expense account and grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles.

Since then both parties have indulged in plenty of mudslinging and thrown around allegations that not only created a huge image problem for BharatPe, but also called into question how many of these irregularities had escaped the notice of investors during their due diligence process in BharatPe’s multiple rounds.

The fintech unicorn is backed by some of the biggest investors in India including Sequoia Capital, Steadview, Ribbit, Coatue and others. Even as all the focus was on the players in this saga, the company saw several employees look to jump ship. At the moment, it’s still not clear how much this controversy has impacted the company’s business.

BharatPe claims to have seen its strongest quarter in terms of revenue in Q4 FY22, which ended March 2022, with 4x growth claimed over the same period last year. It also added that the total payments value (TPV) has grown by double digits for merchant payments, consumer payments and loans between February and March 2022. “Going forward, we are tracking well to break even on our merchant business and further strengthen our consumer business.”

However, it did not reveal actual details of the revenue and the profitability in this statement. In FY21, BharatPe reported a loss of INR 1,619 Cr with a total operating revenue of INR 119 Cr. Since then it has added new verticals such as P2P loans, gold loans and has also entered into a joint venture with financial services company Centrum to take over the cash-strapped Punjab Maharashtra Cooperative Bank and launch the Unity Small Finance Bank.