Thursday, 15 November 2018

CAIT wants govt to launch e-commerce marketplace in partnership with trade associations

Traders' body CAIT Thursday urged the government to launch an e-commerce marketplace portal in partnership with trade associations where small traders, artisans and women entrepreneurs can sell their products in a 'fair and transparent manner'.
The Confederation of All India Traders (CAIT) said it has also sent a letter to Union Commerce Minister Suresh Prabhu Thursday alleging "that the e-commerce business in India is highly vitiated and has been gripped by a few big online companies who are indulging into predatory pricing, deep discounting and loss funding" against the FDI guidelines of the government.
Representational image. Reuters
Representational image. Reuters
The commerce and industry ministry notifies FDI policies through press notes. Press Note 3, which was released in 2016, enlists guidelines for foreign direct investment in e-commerce sector.

"The government in association with trade associations should launch an e-commerce marketplace portal where small traders, artisans, women entrepreneur and others can sell their products in a fair & transparent manner," CAIT said to Prabhu.
In the letter to Prabhu, the traders' body also demanded early announcement of an e-commerce policy and formation of a Regulatory Authority to monitor the e-commerce business in India.

How Walmart decided to oust an icon of India’s tech industry

Flipkart co-founder and former CEO Binny Bansal. Photo: AFP
Flipkart co-founder and former CEO Binny Bansal. Photo: AFP
Bangalore/New York: For Binny Bansal, the end of his long run as co-founder of India’s most successful startup came Saturday when he began calling colleagues to say he was done. The 37-year-old was stunned that officials from Walmart Inc., his startup’s new owner, were probing details of an affair years earlier. An investigation found no evidence of wrongdoing. Nevertheless, a decade after he created e-commerce leader Flipkart, he was calling to say goodbye.
His ouster, announced Tuesday from Walmart’s hometown of Bentonville, Ark., left workers at Flipkart, half a world away in Bangalore, stunned and struggling to make sense of the cryptic explanation. They worried about Walmart’s motivations and wondered if other Flipkart leaders would exit.
In its announcement, Walmart said it had initiated an independent investigation into an allegation of “serious personal misconduct.” The probe didn’t uncover evidence to support the charge. However, company said, “it did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.”
The explanation satisfied almost no one. Flipkart employees and workers at other startups wondered whether Walmart was using the episode to push Bansal aside. His co-founder left after the deal was completed, and several Flipkart employees saw the timing of his resignation as suspicious. Walmart’s handling of the situation raises more questions than answers, said Kannan Ramaswamy, a professor at the Thunderbird School of Global Management at Arizona State University.
“Like it or not, Bansal is one of the very successful entrepreneurs in the country and India likes to claim such heroes as its own, so I don’t think this issue will disappear,” said Ramaswamy, who specializes in management strategy in the country. “There has to be more information forthcoming.”
Walmart declined to comment for this story and Bansal did not respond to questions.
This account of what led to Bansal’s departure was pieced together from interviews with two dozen people directly involved in the events or associated with the company. It doesn’t answer all the questions swirling around the e-commerce giant long heralded as the leading example of India’s rise. But it clarifies some of the key details that led to the ouster of one of the country’s most celebrated entrepreneurs.
The allegations against Bansal arose just after Flipkart agreed to sell a controlling stake to Walmart, the American retailing giant. The deal came after months of negotiations during which Walmart archrival Inc. pressed hard to win the deal. In May, Walmart agreed to pay $16 billion for a 77 percent stake.
The woman who had been involved with Bansal contacted executives at Walmart in July, as they were working to close the U.S. company’s biggest deal ever. She alleged that Bansal had sexually assaulted her in 2016.
Walmart took the allegations seriously enough that it appointed a global law firm to investigate the charges. The independent probe found that he’d had a consensual, extramarital relationship with the woman and that she was not an employee at the time of their involvement, though she had previously worked at Flipkart, according to people with knowledge of the investigation.
But Walmart’s senior executives still had questions. They wanted Bansal to explain why he hadn’t disclosed the allegations during the signing of the deal, particularly while answering mandatory questions about litigation risk, according to the people. They also wanted to know about alleged payments Bansal had made to the woman, perhaps to encourage her silence, one of the people said.
The co-founder insisted he didn’t have any obligation to disclose the relationship, especially because there was no evidence of assault. He also didn’t think he should have to answer more questions after the investigation. The questioning was particularly galling because Bansal had led formulation of policies for sexual harassment and whistle-blower complaints. Eventually, Bansal announced he’d had enough, the people said.
It’s unusual to hold an executive responsible for relationships outside of the workplace, according to legal experts, but they do have to answer questions honestly.
“I don’t think he had an obligation to report to a new owner a previous intimate relationship,” said Alan Exelrod, an attorney in San Francisco at Rudy, Exelrod, Zieff & Lowe. “The flip side is that if he’s asked and he doesn’t tell the truth, then he’s in trouble.”
The decision most likely turned on executives’ ability to trust Bansal and their desire to avoid a public relations disaster, said David A. Tauster, an associate attorney in Nixon Peabody’s labor and employment practice group.
“You could see how Walmart would read between the lines and think, ‘You know what? The harassment is not the only thing at issue here,’’ Tauster said. “The risks of keeping this executive on are not going to outweigh the benefits of just using this as an opportunity for a somewhat clean break.”
With Flipkart, Walmart has a lot at stake in India’s growing online retail market. The 1.3 billion country’s retail market projected to grow to $1 trillion by 2020. Without a single dominant local retailer and booming mobile internet access rates, Walmart and Amazon are in fierce competition to emerge as the market’s leader. With Bansal’s departure, Kalyan Krishnamurthy, who has led the Flipkart online retail business, will take on additional responsibilities.
Grabbing control of Flipkart has become critical for Walmart, which has also strengthened its own ethics and compliance practices in the wake of a six-year international corruption investigation. The company cultures were completely different in this way, according to people familiar with both firms. At Flipkart, an extramarital affair would be considered personal; Walmart executives thought it was worth disclosing.
In a statement that announced the news internally, Walmart said it had full confidence in the strength and depth of leadership at Flipkart and would support the subsidiary’s “desire to evolve into a publicly-traded company.”
While echoing many of the words in Walmart’s communique, Bansal’s email explicitly described the events as personal. He was stepping away from the operating role but would continue on the Flipkart board and as a large shareholder.
“Thank you for all the goodwill that you’ve shown towards me over the years,” he ended, in an emotional sign off. “I’m grateful to have had the opportunity to help get us to where we are today.

Paytm's Parent Company One97 Communications Widens Net Loss to Rs 1,490.4 Crore

Paytm's parent company One97 Communications has reported a higher net loss of Rs 1,490.4 crore for the year ended on March 31, 2018, compared to Rs 879.6 crore in the previous fiscal, according to regulatory filings.

One97 Communications' revenues from operations, however, grew manifold to Rs 2,987.41 crore in FY2017-18 as against Rs 624.76 crore in FY2016-17, according to the company's filings to the Corporate Affairs Ministry provided by business intelligent platform Tofler.

Its employee benefits expenses during the fiscal under review were at Rs 540 crore.

The filing stated that the company has a number of subsidiaries including Paytm Entertainment, Paytm Money, Mobiquest Mobile Technologies, Little Internet, Xceed IT Solution, Nearbuy India and Acumen Game Entertainment among others.

A separate filing of Paytm E-commerce – which operates as Paytm Mall – showed that Paytm's e-commerce venture had registered a net loss of Rs 1,787,55 crore in FY2017-18 as against a loss of Rs 13.63 crore in the previous financial year.

The entity, which competes against the likes of Flipkart, Amazon, Snapdeal and Shopclues, saw its revenue from operations rising manifold to Rs 744.15 crore in FY2017-18 from Rs 7.16 crore in the previous year.

Wednesday, 14 November 2018

Binny Bansal resigns from Flipkart over charges of personal misconduct

Flipkart co-founder and group chief executive Binny Bansal on Tuesday abruptly resigned from the company, following an internal investigation into an allegation of “serious personal misconduct”, sending shockwaves across India’s startup ecosystem. Walmart-owned Flipkart didn’t specify the allegation but one person familiar with the matter said it was related to an alleged sexual harassment by Bansal in 2016.
The investigation did not find any evidence to support the allegation that was made by the complainant. But it showed “lapses in judgement” on Binny Bansal’s part, said Walmart, adding that the episode revealed “particularly a lack of transparency, related to how Binny responded to the situation”.
“Binny has been an important part of Flipkart since co-founding the company, but recent events risked becoming a distraction and Binny has made a decision to step down. His decision follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct. He strongly denies the allegation,” Walmart said in a statement on Tuesday.
Binny Bansal, in a letter to Flipkart employees, “strongly denied” all allegations of serious personal misconduct made against him, Reutersreported on Tuesday. “My plan was to continue in my current role for a few more quarters to continue transition after closing deal with Walmart... My decision to step down has been accelerated by certain personal events that have taken place in the recent past,” he said in the letter.
According to another person aware of the development, Bansal will remain on the board of Flipkart and continue to be a shareholder in Flipkart for now. Bansal owns shares worth $700-800 million in Flipkart and was contracted to stay on at the company till 2020.
Bansal’s ouster comes months after his fellow Flipkart founder Sachin Bansal was also forced out of the company during its sale talks with Walmart in April, following a bitter fallout with the then board of Flipkart. In May, Walmart agreed to buy 77% in Flipkart for $16 billion.
Binny Bansal’s exit marks the end of an era at not just Flipkart, but also for the entire Indian startup ecosystem, which has bestowed rockstar status on the two Bansals (not related), as their success with Flipkart inspired a new generation of entrepreneurs.
The latest development effectively hands over control of the entire group to Flipkart CEO and former Tiger Global Management executive Kalyan Krishnamurthy, who has been running the e-commerce firm since his return to Flipkart in June 2016.
Walmart said that Myntra and Jabong, which till now had operated as independent platforms within the Flipkart Group, will now be rolled into Flipkart’s core e-commerce business, which is led by Krishnamurthy.
Myntra and Jabong CEO Ananth Narayanan will now report to Krishnamurthy. Walmart also added that both Krishnamurthy and PhonePe CEO Sameer Nigam will now report directly to the board of Flipkart.
Walmart also added that Binny Bansal has been contemplating a transition for some time and that the company had been working on a succession plan, which has now been accelerated.
Mint first reported on 24 September that Flipkart was considering naming a new CEO at the group level to replace Bansal, who took over the chairman’s role in May after former chairman Sachin Bansal left Flipkart over differences with the company’s board.
Mint had also reported that Krishnamurthy was the frontrunner to take over from Bansal.
Walmart did not reveal any further details about the incident. Mint could not immediately verify what transpired during the alleged incident.

Myntra future uncertain as Walmart puts it under Flipkart

 Walmart Inc.’s latest decision to put Myntra and Jabong under Flipkart has created uncertainty about the direction of the specialty online retailers, which had largely operated independently within the Flipkart Group since Myntra was acquired by the e-commerce firm in 2014. Two people familiar with the matter said that Walmart was still evaluating if there was sufficient differentiation between Flipkart and Myntra for the latter to continue as an independent company.
Walmart wants to keep Myntra as a brand but it is still evaluating possibilities of integrating some roles between Myntra and Flipkart’s fashion business and running the two more closely, they said.
Until now, Myntra, while being a wholly owned unit of Flipkart, has operated completely independently. Flipkart’s fashion business is headed by former Aditya Birla executive Rishi Vasudev.
Myntra, which acquired smaller rival Jabong in July 2016, is on track to generate $1.8 billion in gross sales this financial year, an increase of 45% from last year.
Its dominance in fashion was a major attraction for Walmart, which agreed to pay $16 billion to buy a 77% stake in Flipkart in May.
The uncertainty over Myntra’s direction comes after Walmart-owned Flipkart said on Tuesday that co-founder Binny Bansal had resigned from the company after an investigation into an allegation of “serious personal misconduct” against Bansal.
The Flipkart co-founder denied the allegation and the investigation into Bansal’s conduct did not find any evidence to support the allegation that was made by the complainant.
But Bansal resigned nevertheless after the investigation revealed “lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation”.
Along with Bansal’s resignation, Flipkart and Walmart also said that Myntra and Jabong will now operate as businesses under Flipkart and that Myntra chief executive Ananth Narayanan will report to Krishnamurthy.
Narayanan had joined Myntra, which was acquired by Flipkart in May 2014 for $330 million, as its first outside CEO in October 2015. Since then, he has led a turnaround of Myntra that is reeling from an ill-conceived move to become an app-only platform. Narayanan reversed that decision and reopened Myntra’s desktop and mobile websites. Under him, Myntra improved margins, accelerated revenue growth and built a strong leadership team.