According to the FHRAI, Oyo lost Rs 3,943.84 crore in 2020-21 (FY21), translating into a loss of over Rs 76,077 every minute.
The Federation of Hotel and Restaurant Associations of India (FHRAI) has petitioned the Sebi to cancel Oyo’s initial public offering (IPO), noting the company’s significant losses in previous years.
According to the FHRAI, Oyo lost Rs 3,943.84 crore in 2020-21 (FY21), which translates to a loss of roughly Rs 76,077 every minute. Oyo has been losing money since its beginning in 2013, and its total revenue has dropped by 69 percent from Rs 13,413 crore in 2020 to Rs 4,157 crore in 2021, according to the organisation. According to FHRAI, the IPO of the SoftBank-backed corporation would only deplete public money while rewarding its founders and senior personnel.
To be sure, FHRAI had previously raised concerns about severe inaccuracies and inadequate disclosures in Oyo’s Draft Red Herring Prospectus (DRHP).
“In addition to engaging in anti-competitive business practices, Oyo is a company that has consistently registered losses since its inception. It may have raised a lot of money to become touted as one of India’s most promising start-ups but it hasn’t done enough to manage the business on the ground as efficiently,” said Gurbaxish Singh Kohli, Vice President, FHRAI.
Oyo has one of the highest ESOP (employee stock option programme) pools of $1.1 billion which too is absurd. In addition to its financial complications and losses, the company is being investigated for anti-competitive practices by CCI,” Kohli added.
Kohli further stated that the Supreme Court is hearing Oyo’s corporate insolvency resolution procedures, that Oyo has failed in running and operating hotels, and that Oyo has utilised COVID as an excuse to walk out of hundreds of hotels with whom the business has MSA agreements (master service agreements). Kohli further claimed that Oyo had not paid the debts of several small hoteliers.
“As of date, it is reported that Oyo has stopped operating single hotels and has been reduced to just another online travel agent. The hospitality industry is wary of Oyo and as its voice, FHRAI wants to caution the public and urges the Sebi to call off its IPO,” Kohli said.
“Oyo has been deliberately suppressing sales figures. It has been under-reporting revenues generated from hotels and has also been evading taxes. There are several Oyo partner hotels across the country and globe that have also reported the same,” said Pradeep Shetty, Joint Secretary, FHRAI.
“The company has been soliciting a large number of bookings at competitive prices of less than Rs 1,000/- per booking which as per the rate slab does not attract any GST. However, Oyo generates a supplementary invoice under the tab ‘convenience fee’ in addition to the booking invoice and conveniently evades tax,” Shetty added.
Previously, FHRAI filed a Sebi complaint alleging Oyo’s tax evasion, and the Directorate General of GST Investigation (DGGI) launched a case of GST or service tax evasion against Oyo and its subsidiaries, according to FHRAI.
According to FHRAI, there are a number of FIRs (first information reports) against Oyo lodged under sections 420, 406, and 409 of the IPC (Indian penal code), some of which are grave economic offences punishable by life imprisonment.