The proposed merger between business-to-business (B2B) e-commerce platforms — Solv India and Jumbotail — may get delayed and also see a possible revision in valuation after an audit flagged related-party transactions involving inflated revenue figures, according to people familiar with the matter.
Sources said a due diligence audit conducted by SR Batliboi and Associates, a member firm of EY, raised concerns about Solv’s dealings with a company called Manish Handloom. The audit found that transactions with the firm may have led to inflated sales numbers for Solv, raising red flags for Jumbotail’s management.
Sources said that Jumbotail had flagged these concerns during the audit process. “An audit report has been submitted to the board urging for a broader investigation,” one of the sources said. The findings could impact the timing of regulatory approvals, including from the Competition Commission of India (CCI), and may also necessitate changes to the agreed valuation terms, the source added.
Emails sent to EY, Solv, Jumbotail and SC Ventures seeking comment went unanswered.
Solv India, incorporated in 2019 as Standard Chartered Research & Technology, is majority owned by SC Ventures (91%), with Japan’s SBI Holdings holding the rest. The two have jointly invested around $130 million in the company over multiple funding rounds.
The deal, announced on March 26, was structured as a $50-million cash-and-equity transaction. Under the arrangement, SC Ventures would exit its shareholding in Solv and receive shares in Jumbotail, while SBI Holdings would also exit. SC Ventures was also expected to invest around $120 million after the merger to acquire a 30% stake in the combined entity, giving its operating partner Gautam Jain a seat on Jumbotail’s board.
The combined post-merger entity had been projected to be valued at $900 million, well above the standalone valuations of Solv and Jumbotail, which together total around $600 million. With the audit findings now in play, this projection is likely to be revised downward.
The deal has already been preceded by management changes at Solv, including the abrupt departure of former CEO Amit Bansal. Bansal was removed shortly before the merger was announced, despite having publicly stated months earlier that Solv was planning an IPO by 2026.
Financial records reflect heavy losses for both firms. Solv’s revenue grew from Rs 1.1 crore in FY20 to Rs 141.2 crore in FY24, but it posted losses of Rs 374.6 crore in the same period. Jumbotail, which reported a revenue of Rs 850 crore and a loss of Rs 264.2 crore in FY23, is yet to file FY24 figures.
Jumbotail has raised $159 million across seven funding rounds, with its latest valuation pegged at $285 million following an $18.9 million Series C extension led by Artal Asia, its largest shareholder.
The merger was seen as a strategic move for Jumbotail to expand beyond groceries and leverage Solv’s non-grocery product network.