 "Auditors flag irregularities in Indian units of Chinese brands Oppo, Realme")
Auditors of Chinese smartphone brands Oppo and Realme have raised several concerns about the financial and operational integrity of their India units, intensifying scrutiny on the firms already embroiled in multiple regulatory investigations. The issues were disclosed in recent filings with the Registrar of Companies (RoC), The Economic Times reported on Tuesday.
Oppo flagged on negative net worth, external borrowings
Oppo Mobiles India, the third-largest smartphone brand in the country, was flagged for having a negative net worth of ₹3,551 crore as of FY24, driven by accumulated business losses from previous years.
The auditor also noted an adverse debt-equity ratio and significant external borrowings, including ₹1,668 crore from its Hong Kong-based parent and ₹414 crore in loans from HSBC Bank.
Current borrowings also stood at ₹2,085 crore. The company is reportedly involved in several material litigations and is under regulatory examination, with uncertain outcomes that may impact its financial stability and operational continuity.
Raising doubts about long-term viability, the auditor emphasised material uncertainties about Oppo’s ability to continue as a going concern.
Oppo says company is profitable
Oppo, however, maintains it was profitable in FY24 and expressed confidence in managing short-term cash flow gaps through working capital arrangements or support from its parent. However, any equity infusion would require government approval under Press Note 3, mandated for FDI from neighbouring countries, posing a potential bottleneck in securing timely funds.
Realme pulled up for procedural lapses
Realme Mobile Telecommunications India, the fifth-largest player in its category in India, was also pulled up by its auditor for procedural lapses and inadequate record-keeping. Concerns were raised about the accuracy of financial accounts, with questions over the completeness of its FY24 profit and loss statement.
These disclosures come amid ongoing probes involving customs duty disputes, income tax irregularities, and alleged money laundering by Chinese smartphone makers.