Thursday 23 July 2015

In search of fresh leadership at its Indian firms, Rocket Internet now shifting Jabong CEO and MD to new roles

Rocket Internet is shaking things up yet again at its Indian companies as it looks for fresh leadership to lift performance.

The latest to get the treatment is Jabong, where CEO Arun Chandra Mohan and Managing Director Praveen Sinha are being replaced, three people familiar with the development said. Mohan will shift to a new position within Rocket in the coming months, two of them said. Sinha is also expected to take up a new role within the group that aims to be the largest Internet platform outside the US and China.

Rocket was founded by three German brothers in 2007 and specialises in building online startups modelled on US companies. Another move in the offing is that of Heavent Malhotra, managing director of Rocket Internet India, who is said to be leaving to start a venture of his own. The Rocket office in Gurgaon is planning a farewell for him this week or next, people said. Indian ecommerce as a whole is growing exponentially.

However, these companies are burning cash as they seek to acquire customers. Sites such as Jabong meanwhile face intense competition from rivals such as Myntra and a plethora of niche portals. "Rocket is changing management of all their business, including Jabong," said one of the persons cited above.
"Jabong has been under pressure for sometime." Spokespersons for Jabong and Rocket Internet declined to comment on what they said were "rumours." "But we can tell you that our shareholders are committed to the Indian market where we see a tremendous opportunity to expand Jabong," the retailer's spokesperson said in an e-mailed reply.

A senior Rocket official recently informed Jabong staff about the impending changes at the company and at Rocket in a town hall held at its Gurgaon office. This isn't the first time that Rocket is restructuring the top management of Indian startups that it owns, said private equity executives and angel investors. "Rocket is known to make structural changes at the top in most of its companies where it has invested," said an angel investor with stakes in Rocket's rivals. Another angel investor said, "Rocket has a history of shifting roles within its group."

Earlier this month, Rocket Internet announced that cofounders of online furniture and home products retailer FabFurnish, Vikram Chopra and Mehul Agrawal, quit as chief executive officer and managing director, respectively. ET reported on July 5 that Rocket-backed FoodPanda India's managing director Rohit Chadda may step down from the online food-ordering company or take on a different role in the organisation as part of a senior management shakeup.

Jabong, India's second largest fashion ecommerce company, was founded in 2010 by Mohan, Sinha and two other promoters who have since left the company. While the company more than doubled its revenue to.`811 crore in calendar 2014, its deep-discounting strategy caused losses to swell fivefold to .`160 crore, up from .`32 crore in the previous year.

Jabong is part of Global Fashion Group (GFG), an emerging markets fashion ecommerce firm launched by Rocket Internet and Swedish investment firm Kinnevik last year. GFG comprises five businesses including Dafiti in Latin America, Lamoda in Russia and the CIS, Namshi in the Middle East and Zalora in Southeast Asia and Australia, besides Jabong.