According to reports, Mumbai-based distribution and supply Chain Company Moksha Group has acquired assets from business-to-business (B2B) consumer electronics startup Arzooo.

Months after Arzooo failed to obtain additional funds or combine with larger competitors, the distress agreement was reached.

Founded in 2016 by two former Flipkart executives, Khushnud Khan and Rishi Raj Rathore, the Bengaluru-based business raised $80-90 million in debt and equity, with support from companies including Doordash founder Tony Xu, Japan's SBI Holdings, and Celesta Capital.

Moksha Group will purchase Arzooo's technological platform, its trademarks, and other intellectual property as part of the agreement.

Arzooo also has a private label brand, which will now be owned by Moksha Group, according to reports.

The firm lost a lot of money and fired hundreds of workers in the last year. Due to a lack of funds, it allegedly stopped paying its sellers.

The company’s troubles started after they overspent last year during the Diwali sales, giving heavy discounts and incentives to retailers.

Following this, one of their lenders pulled the credit line, seeing the business was on shaky grounds without additional funding. This led to a capital crunch and the company spiraled into issues, with the only option being to find a buyer, as per reports.

Current Arzooo equity backers are probably going to write off their interests as a result of the transaction.

According to Tracxn, the company’s founders hold a 32.2 percent stake, while Celesta Capital is the biggest external shareholder with a 10.2 percent stake.

In 2021-22, Arzooo’s loss shot up three and a half times to Rs 63 crore from Rs 18 crore in the previous fiscal, even as its revenue surged to Rs 1,118 crore from Rs 259 crore. It hasn’t yet filed its financial statements with the Registrar of Companies for 2022-23 and 2023-24.

Smaller merchants will receive a comprehensive package from Moksha's acquisition of Arzooo's assets, which will include integrated finance solutions and necessary digital tools. Moksha Group will help small merchants gain a stronger presence in a changing market by offering them cutting-edge technology, loan availability, and cost-effective tools like EMIs (equated monthly installments), which will enable them to compete and expand sustainably.