Flipkart founders Sachin Bansal and Binny Bansal have handed over the operational control of the company they built over the past decade to Kalyan Krishnamurthy, the nominee of marquee American investor Tiger Global.
Krishnamurthy was on Monday named the new chief executive officer (CEO) of the Bengaluru-based company. He replaced co-founder Binny Bansal, who was made the group CEO.
The change in top leadership takes place a year after then CEO Sachin Bansal was elevated as the chairman. Tiger Global is the largest investor in Flipkart by value.
The Bansals losing out operational control of Flipkart comes at a time when global rival Amazon, in which Tiger Global holds a minority stake, is stepping up investment in India in an attempt to overtake the Bengaluru-based e-commerce firm. In the current backdrop of consolidation, the latest development may free up options for investors to explore a deal to sell Flipkart or merge it with global e-commerce players, eyeing to expand footprint in India, sources said.
Binny Bansal has been elevated as the group CEO with mandates to look at strategy, mergers and acquisitions, and exploring new business areas. Sachin Bansal will continue to be the chairman.
“Last year, Flipkart evolved as a group. We acquired Jabong and the consolidation is going on well. Myntra became a $1-billion GMV run rate company and achieved around 80 per cent year-on-year growth. PhonePe has been another runaway success story with 40 per cent (UPI) Unified Payment Interface in the country,” Binny Bansal stated.
Nitin Seth, a former India head of Fidelity offshore operations and currently the chief administrative officer at Flipkart, has been named the chief operating officer.
In the past one year, Binny Bansal has rationalised costs, forcing high-cost executives to leave and looked at improving efficiency. Krishnamurthy, who had earlier led supply chain finance at Procter & Gamble and managed finances of eBay in Asia Pacific, was brought in June last year. He had taken over as head, category design organisation, to build a strategy to revive Flipkart and raise fresh funds to gear up against Amazon.
Flipkart lost its valuation from a peak of $15.2 billion after several mutual funds marked down the value of their investments in the company, while Bansals struggled to get new investors to maintain lead over Amazon.
Despite this, Binny Bansal and Krishnamurthy mobilised resources to spring a fight back against Amazon’s aggressive push, to score higher sales during the festive season. The battle cost had forced Amazon’s international operations to post its highest losses in the September quarter.
Yet, Flipkart’s fight was being described as being led by Krishnamurthy. In an interview to Business Standard, Binny Bansal had said he still commanded a role in the organisation.
“Kalyan (laughs) just came (from Tiger Global) couple of months ago, I don’t how he is running things from our side.. it (Flipkart) is neither run by Binny or Kalyan, it is teamwork,” Bansal had said in the September interview.
While Flipkart has been promoting itself as a horizontal e-commerce player, it is focusing on the fashion vertical with the Flipkart-Myntra and Jabong combine, with two-thirds of market dominance.
Analysts say the shift in leadership was bound to happen.
“Investors had brought those people in and I think Bansals were quite happy not running operations. Binny Bansal had taken that responsibility to stabilise the situation… he managed to do that to a large extent. If you look at the reduction of losses, he has delivered on that front,”said Harminder Sahni, founder and managing director of consulting firm Wazir Advisors. “This was definitely going to happen sooner or later. Founders beyond a point might not be interested in operations. They are not hardcore industrialists.”
[Source:-BS]
