The Federation of Hotel and Restaurant Associations of India (FHRAI) on Wednesday urged the Securities and Exchange Board of India (SEBI) to cancel the initial public offering (IPO) of online hospitality giant Oyo, citing the massive losses suffered by the hotel room aggregator in recent years.
FHRAI warned that Oyo’s IPO would wipe out public wealth while enriching its founders and top executives.
According to reports, Oyo suffered losses of Rs 3,943.84 crore in the fiscal year 20-21, which translates to a loss of over Rs 76,077 every minute.
According to the leading hospitality industry body, since its inception in 2013, Oyo has suffered losses and its total revenue has fallen by 69% from Rs 13,413 crore in 2020 to Rs 4,157 crore in 2021.
“Oyo is a company that has consistently posted losses since its inception. It may have raised a lot of money to be touted as one of India’s most promising start-ups, but it hasn’t. done enough to run the business on the ground as effectively,” said Gurbaxish Singh Kohli, FHRAI Vice President.
In addition to its financial complications and losses, the company is under investigation for anticompetitive practices by the ICC, Kohli said.
FHRAI had previously objected to gross inaccuracies and inadequate information contained in the draft Red Herring Prospectus (DRHP) filed by Oyo.
The association also filed a complaint with SEBI alleging Oyo’s tax evasion.
The GST Investigation Branch (DGGI) had filed a GST/service tax evasion complaint against Oyo and its subsidiaries.
“Oyo deliberately suppressed sales figures. It under-reported revenue generated by hotels and also evaded taxes,” according to Pradeep Shetty, Honorary Joint Secretary of FHRAI.
The hotel major had yet to respond to FHRAI’s allegations.
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