Medikabazaar faces Rs 279 Cr indemnity claim as investors allege financial misstatements

Series C investors in Medikabazaar have filed a Rs 279 crore indemnity claim against the company, following allegations of fraudulent financial reporting tied to earlier funding rounds at the business-to-business platform for medical equipment and consumables.

Documents reviewed by The CapTable and corroborated in the company's FY23 consolidated financial filings showed that the indemnity claim, formally valued at Rs 278.7 crore, has been disclosed as a contingent liability. Under its new management, the company stated it has obtained legal advice and intends to contest the claim.

The demand comes in the wake of a whistleblower complaint submitted in December 2023 that triggered a forensic investigation into the company’s books and governance practices. The probe found that Medikabazaar, incorporated as Boston Ivy Healthcare Solutions Pvt. Ltd., had engaged in financial misreporting across multiple fiscal years under its previous leadership.

The indemnity claim follows standard provisions common in venture capital and private equity transactions, which allow investors to seek financial redress if post-investment audits reveal misrepresentations, fraudulent behaviour, or breaches of disclosure requirements.

The demand for compensation stems from alleged misstatements made during the company’s $75 million Series C funding round, where several global and domestic investors participated. According to company filings, stakeholders who led or joined the round include Creagis II, CDC Group (now British International Investment), HealthQuad, Ackermans & van Haaren, and Rebright Partners.

Together, these investors control a substantial portion of Medikabazaar’s equity and convertible instruments. CDC Group and Ackermans each held over 11% and 12% of the company’s shares, respectively, as of March 2023. HealthQuad's combined holdings through multiple vehicles stood at over 14%. Creagis, in addition to its preference shareholding, owns the entire allotment of 61,846 compulsorily convertible debentures, making it a significant creditor and equity stakeholder.

In January 2024, a group of these investors—collectively representing 47.1% of the company’s equity—sent a special notice to the company’s board, citing breach of fiduciary duty and fraud by prior management. The letter, a copy of which has been reviewed by YourStory, was signed by individual and institutional investors, including Arun Venkatachalam, Sunil Kalra, and representatives of Rebright, HealthQuad, KOIS Holding, and Ackermans & van Haaren.

The claim from investors raises the stakes in what has become one of the Indian healthtech sector’s most high-profile financial governance controversies in recent years.

While Medikabazaar continues to operate under new leadership and pursue operational reforms, the indemnity claim and surrounding legal proceedings could have lasting implications for its capital structure and investor relations.