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Bloomberg
The outlook for Indian online retailer Flipkart was decidedly gloomy when Kalyan Krishnamurthy became chief executive officer in January 2017. The startup’s valuation was dropping, fundraising was more difficult and Amazon.com Inc. was pledging $5 billion-plus to siphon away customers.
So the 46-year-old former hedge-fund manager took some risks. He fired senior managers, set more-aggressive sales targets, boosted spending on promotions and promised to dominate India’s festival-season shopping. His strategy worked, and now comes the return on those risks — a $16 billion initial investment from Walmart Inc. in Flipkart Group that helps cement the Indian company’s lead against Amazon and Alibaba Group Holding Ltd. in the world’s fastest-growing major economy. Online shopping in India is projected by Morgan Stanley to reach $200 billion within the next decade, compared with $30 billion now.
“His relentless focus and his aggressive execution changed Flipkart’s fortunes,’’ said Anil Kumar, CEO of RedSeer Consulting in Bengaluru.
“He brought the edge that Flipkart was missing.’’
The deal announced on May 9 is the biggest-ever by a foreign buyer in India, and it represents a significant part of Walmart’s overseas expansion efforts. Since entering Mexico in 1991, the world’s largest retailer has closed money-losing operations in Germany and South Korea.
Two years ago, Walmart sold its Chinese e-commerce business, Yihaodian, in return for a financial stake in JD.com Inc., the smaller rival to Alibaba. The number of Walmart’s international stores hasn’t budged from about 6,000 since 2013, and it’s had to shutter outlets in Japan and Brazil.
Krishnamurthy will remain CEO of Flipkart, Walmart said. The company, founded in 2007 by Binny Bansal and Sachin Bansal, is the most valuable of 10 unicorns in India, according to CB Insights, and backers have included Tiger Global Management, SoftBank Vision Fund, Tencent Holdings Ltd., EBay Inc. and Microsoft Corp.
Krishnamurthy declined to comment for this story.
“For Flipkart, this deal is more than just money,’’ said Satish Meena, a New Delhi-based senior forecast analyst at Forrester Research Inc.
Krishnamurthy spent seven years in EBay’s Asia finance operations before joining Tiger Global as its finance director in 2011. He first arrived at Flipkart in early 2013 as its interim chief financial officer to support the Bansals, who each spent time as CEO. They are not related.
Amazon committed $5.5 billion to its efforts, and country manager Amit Agarwal adapted the site to local conditions — such as simplifying the app so it didn’t crash cheap smartphones. That helped propel Amazon to No. 2 behind Flipkart in just four years, and the Seattle-based company started to eye a partnership with Flipkart. Both Bansals stepped aside for Krishnamurthy in January 2017 — a year that many observers said would be make-or-break for both him and the startup.
Krishnamurthy started his tenure by trying to change the narrative from one of “deep-pocketed Amazon versus startup Flipkart’’ to one based on a homegrown operator knowing what 1.3 billion Indians want.
Walmart to comply with tax rule on India Flipkart deal, says CEO
Bloomberg
Walmart Inc. will comply with any tax demand arising from its purchase of a stake in India’s e-commerce leader, a move that could help the global giant avoid festering litigation that overseas companies such as Vodafone Group Plc face in the South Asian nation.
“Our intent is, whether looking backwards related to our acquisition here or looking forward, we will be compliant with whatever the tax rules are,†Walmart CEO Doug McMillon said. The world’s biggest retailer led a group that bought a 77 percent stake in Flipkart Online Services Pvt. in a deal valuing the Indian company at about $21 billion.
In its decade-long existence in India, Vodafone has spent a large part fending off tax claims on its 2007 acquisition of the Indian unit of Hong Kong-based Hutchison Whampoa Ltd., now part of CK Hutchison Holdings Ltd.
McMillon said the retailer plans to run its cash-and-carry business and online retail in the Asian nation separately for some time and will explore the option of implementing Flipkart’s payments ecosystem, including the PhonePe application in other countries.
Walmart’s international reach sprawls across 6,360 stores in about two dozen countries from Argentina to Zambia.
