As India's top eyewear retailer Lenskart Solutions Ltd prepares for one of the year's most closely watched initial public offerings, a formal complaint has been lodged with the Securities & Exchange Board of India (SEBI) by a group of its franchise partners.

The complaint, dated August 11 and addressed to SEBI chairman and senior officials, accuses the company of suppressing details of criminal proceedings, misrepresenting financial records, and misleading investors in its Draft Red Herring Prospectus (DRHP).

Last month, Lenskart filed its DRHP to raise Rs 2,150 crore through a fresh issue, with an additional offer for sale (OFS) by existing investors and founders. The Peyush Bansal-owned company is reportedly seeking a valuation of $8-$9 billion.

The franchisees allege 'intentional omissions and misleading disclosures', which are argued as prima facie violations, under Section 34, 35, 36 of Companies Act, 2013, Section 447 (Fraud), as well as breaches of the SEBI (Issue of Capital and Disclosure Requirements).

The complaint – as seen by The Head and Tale – claims that Lenskart has deliberately suppressed details regarding FIR, registered on October 26, 2024, at Devaraja Police Station, Mysuru. The FIR sets out allegations of financial fraud, falsification of accounts, criminal breach of trust, revenue suppression using software, and coercive settlement practices.

According to the complainants, Lenskart's DRHP mischaracterises this FIR as a minor contractual dispute involving only three Mysuru stores.

This, the complainants contend, is a deliberate concealment of crucial facts such as: the actual number of complainants is 13 stores spread across multiple cities, not just three; the ongoing investigation by the Criminal Investigation Department-Economic Offence Division (EOD), Karnataka, and the seizure of company software data.

"And, the alleged financial impact of over Rs 12 crore in defrauded monies across the 13 franchise stores in Karnataka, which includes GST falsification and abetment amounts over Rs 4 crore due to alleged accounts manipulation spanning over six years," the complaint notes.

The complaint states that agreements with the affected franchisees were terminated as a consequence of what they describe as fraudulent and unlawful acts committed by the promoters and key managerial personnel, and not due to ordinary commercial or contractual disputes. 

It further adds that the "consolidated FIR underscores the systemic and uniform nature of the alleged misconduct across various franchise stores, which was wilfully suppressed in the DRHP disclosures."

The franchisees also cite a separate complaint filed with the Ministry of Corporate Affairs, which led the Registrar of Companies, Delhi, to issue a notice to Lenskart's company secretary on February 21, 2025. They argue that the omission of this statutory notice in the DRHP constitutes a material violation of SEBI's disclosure requirements.

Further, the complainants point to an internal email in which Lenskart admitted to filing GST returns with figures inconsistent with its MIS and POS records. This amounts to "a breach of the Companies Act's obligation to present a true and fair view of accounts, and that the misreporting directly inflated the company’s reported revenues and potentially misled investors on valuation metrics."

The complainants argue that the issues raised represent "compelling public interest concerns involving potential losses to the Government exchequer including other stake holders".

They have urged SEBI to halt the IPO process until the investigations are concluded, warning that permitting the issue to proceed would expose public funds to a company whose disclosures they claim are seriously deficient.

Although the Karnataka High Court has stayed the FIR pending the next hearing, the complainants argue that this does not prevent SEBI from initiating its own inquiries.

The complainant mentions that the franchise owners are pursuing a counter-petition to have the stay lifted, allowing the police investigation to continue.

Lenskart did not respond to a query seeking comment.