Meesho IPO: E-commerce player is embroiled in a legal tussle with Amazon Web Services, as shown in the updated draft red herring prospectus (DRHP) filed by the company.
Meesho’s updated filed with the Securities and Exchange Board of India shows that AWS, a key technology vendor, has claimed non-payment of certain dues.
Why has AWS filed a claim against Meesho?
According arbitration filed by AWS against Meesho, the former claims the company hasn’t paid bills under a special pricing agreement signed on February 25, 2022.
The DRHP stated, “Amazon Web Services India Private Limited (AWS) has initiated arbitration proceedings against our Company before a three-person arbitral tribunal in New Delhi (Arbitral Tribunal) under the Arbitration and Conciliation Act, 1996, as amended, for alleged non-payment of invoices raised by AWS pursuant to a private pricing addendum (PPA) dated February 25, 2022, executed between AWS and our Company.”
The amount claimed by AWS in the matter amounts to ₹127.45 crore ($14.44 million), comprising spend commitment shortfall payment amount, pending service fees, interest on the respective payments and the cost of arbitration.
What has been Meesho’s response?
Meesho has disputed the invoices raised by AWS, alleging deficiencies in the services provided by AWS. The company has also challenged the enforceability of the minimum commitment provisions under the PPA and the applicability of AWS’s online customer terms and conditions, Meesho’s DRHP stated.
Meesho has not only sought dismissal of the claim by AWS but also asked for ₹86.49 crore in compensation for the losses suffered due to the disruption of business and inadequate support provided by AWS, salary costs incurred due to migration from services procured from AWS, along with interest and costs.
Why cloud services matter for Meesho?
The IPO-bound Meesho relies on cloud service providers. Any failure by these companies to perform their obligations on time can result in a material impact on the business and is a key risk for the company, states the DRHP.
Meesho relies on several third-party service providers, such as cloud service providers, call centre operators, and telephone operators; and off-roll employees or contractors that include key account managers for seller support, on-ground personnel for Valmo, and for other support operations.
About Meesho IPO
Meesho’s IPO draft papers show the company is looking to raise funds via a mix of fresh share sale and offer for sale (OFS). The fresh issue amounts to ₹4,250 crore, while the OFS involves the sale of 17.5 crore shares by the promoter and other investors of the company.
While the prospectus did not disclose the total IPO size, the Economic Times reported it to be ₹5800-6600 crore.
The company plans to use the proceeds from fresh share sale for investment for cloud infrastructure in Meesho Technologies Private Limited, payment of salaries of our existing and replacement hires for the Machine Learning and AI and technology teams, investment in Meesho Technologies Private Limited for expenditure towards marketing and brand initiatives, and funding inorganic growth through acquisitions and other strategic initiatives and general corporate purposes.
The company’s consolidated loss before exceptional items and tax narrowed to ₹108 crore in the financial year ended March 30, 2025, from a ₹315 crore loss a year ago.
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