Hospitality firm OYO has come out strongly against FHRAI for making allegations against the company with an aim to suspend its IPO and said it has made adequate disclosures in the draft red herring prospectus to market regulator Sebi.
Earlier in October, FHRAI had made a submission to the Securities and Exchange Board of India (Sebi) to suspend OYO’s IPO process, drawing attention to irregularities, such as being engaged in anti-competitive business practice and inadequate disclosures of critical court cases, among others, in its DRHP.
“The Company has never engaged with you (FHRAI) in any business or otherwise for you to have locus and/or authority in any of these matters…The company strongly condemns the ill-informed, manufactured and baseless lies and allegations about inadequate disclosures in the DRHP,” OYO said in a letter to FHRAI.
The company has never engaged with the Federation of Hotel and Restaurant Association of India (FHRAI) in any business or otherwise for it to have locus and/or authority in any of these matters, it added. A copy of the letter written to FHRAI by OYO has been seen by PTI.
“We deny in toto all the allegations levelled by you against us in the complaint. Further, please note, our company has made all adequate disclosures required under applicable law in the draft red herring prospectus dated September 30, 2021,” OYO said.
In response to FHRAI’s letter that it is involved in anti-competitive business practices, OYO denied that it is involved in any unfair, anti-competitive and fraudulent dealings and business practices. The company is not in a dominant position and consequently, the question of abusing its position does not even arise. Further, it denied that it has entered into any anti-competitive agreements, it added.
“The Competition Commission of India (CCI) by way of its order dated October 28, 2019, has held that the company, on a prima facie view, does not enjoy a dominant position, despite being a significant player in the ‘market for franchising services for budget hotels in India’, ” the letter said.
Any assertions that the company has contravened the provisions of the Competition Act, at this stage, are premature, and unsubstantiated. These allegations have been made only to spread false misleading information to the general public, it added.
The company has made all adequate disclosures required under the applicable law in the DRHP in respect of the ongoing proceedings before the CCI, the letter noted. OYO also said that all outstanding litigation required to be disclosed in accordance with the SEBI ICDR Regulations and the materiality policy adopted by the board of directors of the Company in relation to outstanding litigation involving the Company, its subsidiaries, its promoters and its directors have been disclosed in the DRHP.
It had filed preliminary documents for Rs 8,430-crore initial public offering (IPO) in October, as it joined the rush of technology unicorns looking to capitalise on a world-beating rally on stock exchanges.
Commenting on the OYO’s response, FHRAI in a statement said, “The response of OYO is inadequate and avoids addressing core issues. FHRAI rejects Oyo’s response”. OYO must first resolve issues of hoteliers and claimants, it added. “FHRAI will wait for SEBI’s decision on this,” the industry body said in the statement.