Accel-backed agritech startup Mooofarm has responded to allegations of embezzlement, revenue inflation and fake employees raised by its former finance head Vineet Bhati, claiming that its criminal complaint predates the one made by Bhati.
Further, the company has denied Bhati’s claims and maintained its stance around the allegations raised in its complaint.
“Mooofarm terms their former finance head’s allegations as baseless with no evidence to back it. He was the sole authority to make payments and the founders had no knowledge. In addition, the company’s financials are fully audited till 2021-22 and we are fully compliant with our processes,” the company told Inc42 in response to Bhati’s allegations.
Last week, Gurugram-based Mooofarm revealed that it had filed a criminal complaint against Bhati for allegedly embezzling INR 10 Cr from the company and investing them for personal gains. Bhati fired back with his own set of allegations and claimed that instead, the founders were inflating revenue and growth with fake employees and fake customers.
While the matters in both cases are yet to be accepted as first information reports (FIR), Mooofarm claims that it had filed a preliminary complaint against Bhati on July 10, 2023. The company told us that it was able to ascertain more facts after this and file a more detailed complaint with the Gurugram police on July 20, 2023.
Earlier, responding to Mooofarm’s allegations, Bhati had countered saying his police complaint, dated July 13, 2023 was filed before Mooofarm. But this is not the case as per Mooofarm’s latest comment to Inc42.
Mooofarm’s preliminary police complaint was based on an analysis of the company’s current accounts, which show that Bhati made several transactions from this account to his personal accounts from December 2022 to May 2023. An analysis of Bhati’s account showed the corresponding entries from Mooofarm’s accounts and then deposits to investment brokerage accounts.
Mooofarm maintained its original allegation that Bhati was using the company’s funds to invest in derivatives and options. Sources close to the company now claim the total amount withdrawn from the accounts is over INR 45 Cr, which could eventually be attached to the case.
Bhati did not respond to questions from Inc42 about the basis for the claims raised in his complaint against the Mooofarm founders. It must be noted that these claims were only raised after we had originally published Mooofarm’s allegations.
The former finance head also did not respond to questions about the bank statements showing withdrawals with his name in the transaction remarks.
It must be noted that Bhati had raised these allegations in emails to these key shareholders in mid-July 2023. Inc42 has seen those emails, but Mooofarm’s investors Accel, Aavishkaar Capital and Navus Ventures did not comment on the situation.
Will Mooofarm Controversy Boil Over?
Founded in 2019 by Paramdeep Singh, Aashna Singh, Jitesh Arora and Abhijeet Mittal, MoooFarm offers a dairy-as-a-service full-stack platform where farmers can buy cattle and other livestock for dairy farming, access telehealth and balanced nutrition services from veterinarians that are said to increase milk yield, and also get financing aid to manage operations and buy dairy inputs.
Till date, the Gurugram-based startup has raised over $16 Mn from investors such as Accel, Aavishkaar Capital, Aditya Birla Ventures, Rockstart, Navus and others.
Bhati was one of the first employees of the company, having been on board since July 2019 till earlier this year when he said he resigned from the company.
While the embezzlement allegations against Bhati and his subsequent claims of revenue inflation by Mooofarm management have already put both parties at loggerheads, there were more allegations raised by the former finance head.
At one point during his stint in the company, Bhati was classed as a promoter and held 5,000 equity shares in the company till September 2021.
In May 2021, he transferred 3,200 shares to Australian LLC DoGoodles Pty Ltd, followed by 1,200 shares transferred to cofounder Mittal and 600 shares to cofounder Arora in September 2021. Essentially, at the end of FY22, he held zero shares in the company and his remuneration for the year was INR 14 Lakh.
Talking about this, Bhati alleged that “the management without knowledge, consent and intimation transferred 5,000 shares in their name (at a per share price of INR 23, however the value per share was INR 60,000 approx at that time) and removed me from the post of Director.”
But we were not given any further evidence of such a forced dilution of his shares. Mooofarm did not respond to questions about the shares being transferred to two of the cofounders.
While the company has alleged embezzlement, it’s not clear if it will be able to recover any of the money alleged to have been moved by Bhati.
In FY22, Mooofarm reported INR 50.73 Cr in revenue from operations, a near-50X jump from the INR 1.2 Cr revenue stated in FY21. The company remained in the red despite scaling up its revenue. Losses for FY22 grew to INR 14.84 Cr, a 5X jump from FY21’s INR 3.2 Cr loss.
Will the loss of working capital due to the alleged fund syphoning prove to be detrimental to the business in the medium term?
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