Concerns Increased Among Auditors of Chinese Smartphone Companies Oppo and Realme

On Tuesday, it is being reported that numerous irregularities have been raised among auditors of Chinese smartphone companies Oppo and Realme regarding the way their India offices handle money and operations. This has increased the pressure on these companies, which are already being investigated by authorities. These concerns were shared in recent official documents submitted to the Registrar of Companies.

Oppo pointed out financial issues, and Realme for record-keeping problems

• Oppo Mobiles India, the third-largest smartphone brand in India, has been pointed out by its auditor for serious financial problems. The firm had a negative net worth of Rs. 3,551 crore at the end of the financial year 2024 (FY24). This means it had more debts and losses than assets, mainly due to losses from previous years.
• The auditor also pointed out that Oppo had a poor debt-to-equity ratio and had taken on large debts. These consist of Rs. 1,668 crore borrowed from its parent company in Hong Kong and Rs. 414 crore from HSBC Bank. On top of that, its current short-term borrowings stood at Rs. 2,085 crore. The firm is also facing multiple legal actions and regulatory investigations, which could affect its financial health and ability to keep running.
• The auditor raised doubts about whether Oppo can continue operating in the long term.

Oppo says it made a profit   

• Oppo claims it was profitable for it in the financial year 2023-24. The company says it can handle short-term cash needs using working capital or help from its parent company. But bringing in more equity funding would require government approval due to rules on foreign investment from neighbouring countries, which could delay funding.

Realme under scrutiny for poor processes

• The fifth-largest smartphone brand in India, Realme, was blamed by its auditor for not obeying proper procedures and keeping poor financial records. There were doubts about the accuracy of its financial statements, especially its FY24 profit and loss statement.
• These findings come as several Chinese smartphone makers in India face investigations for customs duty problems, tax problems, and alleged money laundering.