India: Flipkart will still be board-run after Walmart deal

While Walmart has taken a majority stake in Flipkart, the company’s operating structure will remain the same: Flipkart Co-founder and Group CEO Binny Bansal said that the company will continue to be led by its board of directors, Livemint reported.

“Thankfully, nothing is changing on that front.” Bansal told Livemint. “Flipkart has been a board-run company, and with Walmart coming in as an investor, the operating structure doesn’t change, Flipkart will still be a board-run company. Members of the board will change a little bit, but I will continue to report to the board.”

In addition, the deal was created to help allow a public listing of Flipkart stock. Beyond not changing the board, the new investors “will help in making an IPO a reality,” Bansal told Livemint.

The news comes about a month after Walmart won a bid for Flipkart. At the time, it was reported that the deal would give Walmart of a majority stake in the firm, roughly 75% of the entire Flipkart group. The final outcome came as a surprise to many.

Kashyap Deorah, internet entrepreneur and author of “The Golden Tap,” had told The Wall Street Journal, “I would not have bet on a deal converging between Walmart and Flipkart, primarily because of the culture difference. Walmart is an extensively positive margin-driven culture, and Flipkart has consistently been a gross margin negative business.” He said the deal shows “Walmart considers India as a long-term strategic market.”

Conventional wisdom says India is positioned to see an explosion of eCommerce growth, similar to what has been observed in neighbor China over the last decade or so. Online retail in India was worth about US$20 billion last year but is likely to rise to US$35 billion by 2019, according to Forrester. Venture capitalists have invested heavily in India on that speculation, and Flipkart has poured those investment funds into discounts, subsidized shipping and buildout infrastructure in-nation.

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