OYO flags up Zostel & other legal disputes as risk factors
image for illustrative purpose
Bengaluru, 2 October Hospitality startup Oyo Hotels and Rooms has flagged up its legal dispute with Zostel (Zo Rooms) along with some other pending cases as risk factors in its draft red herring prospectus (DRHP).
The unicorn has filed the preliminary documents for a Rs 8,430 crore initial public offering (IPO) with market regulator Securities and Exchange Board of India (Sebi).
"Any adverse outcome in legal proceedings involving Zostel may materially and adversely affect our business, reputation, prospects, results of operation and financial condition," Oyo said.
The DRHP also noted that there is pending litigation against Oyo, its founder, and some of its subsidiaries and directors.
"Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect our business, cash flows and reputation," it said.
Among other risk factors, the company highlighted that it has incurred net losses in each year since incorporation, and its ability to achieve profitability may be delayed.
On the COVID pandemic, which has hit the hospitality sector hard, OYO said any lockdown will 'materially and adversely impact' its business and the wider travel industry. It, however, added that the extent to which Covid-19 would further impact its business was uncertain.
Ritesh Agarwal established Oyo in 2013 after dropping out of college. He invested $2 billion, mostly borrowed, to triple his stake in the SoftBank-backed startup to take his ownership to 33.16 per cent in the company. Softbank Group has 46.62 per cent stake in the hospitality startup. Agarwal doesn't plan to dilute any stake in the company as OYO plans to go public.
………………….ENDs
