FirstCry founder Maheshwari under investigation for suspected $50 million tax evasion
29 Aug 2023
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The Indian income tax department is currently investigating potential tax evasion allegations involving Supam Maheshwari, the founder of three prominent Indian unicorns: FirstCry.com, Globalbees Brands Ltd., and Xpressbees, as reported by individuals with knowledge of the situation.
A unicorn is a privately held start-up firm with a valuation of over $1 billion.
According to anonymous sources, the tax department has issued notices to Maheshwari, inquiring about the reasons for not paying over $50 million in taxes related to transactions in FirstCry equity.
Several investors in FirstCry, including ChrysCapital Management Co., a private equity firm, and Sunil Bharti Mittal's family office, have reportedly been contacted for inquiries regarding this issue, as per sources. It has been suggested that Maheshwari is currently engaged in discussions with the tax department to resolve the investigation.
FirstCry is an Indian e-commerce company headquartered in Pune. Established in 2010, the company’s initial emphasis was on the retailing of baby products.
As of January 2020, FirstCry boasted a network of more than 380 stores throughout India. Notably, the company inaugurated its inaugural store in Srinagar in May 2019 and is currently in the midst of its Series E round of financing.
In 2016, FirstCry acquired BabyOye, a subsidiary of the Mahindra Group, for ?362 crore (equivalent to ?518 crore or US$65 million in 2023). Following this merger, the combined entity operates under the name FirstCry.com as a joint venture between FirstCry and Mahindra.
FirstCry, supported by SoftBank, launched its foray into education with the acquisition of Oi Playschool, marking a new trend in a rapidly consolidating industry.
FirstCry secured a funding round of ?95 crore in equity investment from pi Ventures.
FirstCry achieved profitability for the fiscal year concluding on March 31, 2021, following a period of sustained losses. As per a previous Bloomberg report, it stands out as one of the few Indian startups aiming to enter the IPO market with a track record of operational profitability.
As far as the income tax enquiry is concerned, no comments or clarifications were forthcoming from Maheshwari, ChrysCapital, the tax department, ort and Mittal.
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