Just last week news regarding the AskMe Group, which runs ventures such as online search, listings and deals portal AskMe.com, and e-commerce site AskMeBazaar, hit the retail world. The word was that the group plans to curtail operations due to a shortage of funds surfaced in media.
While shut down, acquisition and merger of an e-commerce venture due to mounting losses, especially in the backdrop of this year’s funding freeze has become commonplace in India’s digital market space, the closing down of AskMe became a public spectacle because of its spat with Malyasian investor Astro Entertainment Networks Ltd (AENL). Astro owns 99 per cent stake in AskMe through various shell companies.
How Did It All Start
Getit Inforservices – which owns Askme Bazaar, Askme grocery and Mebelkart – has been embroiled in a bitter financial face-off with minority shareholders as well as Astro since the beginning of 2016.
While AskMe’s minority shareholders alleged that Astro had not cleared dues worth Rs 300 crore and was exiting the company, Astro shifted the blame back to AskMe, questioning their abilities in running day-to-say operations and their inability to meet deadlines due to lack of scale and difficult times in the Indian e-commerce market.
The differences between AskMe’s management, led by executive chairman and co-founder Sanjiv Gupta and Astro Group reached a flashpoint with the latter threatening a forensic audit.
Astro said it plans to appoint a forensic auditor to review AskMe’s books as the firm that runs a host of Internet properties did not turn profitable despite nearly $300 million investment since 2010. The management of AskMe, which runs several listing and e-commerce ventures, in turn, accused Astro of conducting illegal activities and fleeing the country without paying the closure.
In an official statement, Astro said, “An independent review by advisors has concluded that there is little prospect for turnaround and the business is insolvent. AENL intends to appoint a forensic auditor to review Getit’s books and and will take appropriate steps based on the results of that audit.”
AskMe issued an equally strong statement saying that Astro was trying to flee the country without paying employees, vendors and statutory authorities. “They (Astro) have been harassing and intimidating and threatening top employees to aid in their illegal acts which they (AskMe employees) have resisted and resigned,” AskMe said in the statement.
AskMe also said that its employees have given a management buyout offer (MBO) to save the company and various new options “which Astro is trying to block and place totally unreasonable demands from the management and their new backers”.
“Why is Astro blocking it? Is it because they are fleeing the country and don’t want to pay closure costs? They are already absconders in the 2G case,” AskMe said. “We request Indian authorities to ask Astro to pay their dues as per written commitments and let the MBO happen for the future of the company,” it added.
The AskMe statement is referring to legal troubles that Astro Group founder T Ananda Krishnan and some of his colleagues are facing in India for transactions related to the acquisition of mobile-phone operator Aircel and the group’s investment in broadcaster Sun Direct and Red FM. This has led to the group deciding to exit from its various investments in India.
AskMe had indicated in the meeting held on July 18 between the authorised representatives of majority shareholder AENL and minority shareholders that if deal is not consummated by August 31, they will wound up and adjust US$ 5 million towards closure cost.
The company has even sent an e-mailto the staffing firm Innov and all its employees stating August 31 will be the last day of company’s operations.
Meanwhile, a petition filed by Sanjiv Gupta on August 24 at the National Company Law Tribunal (NCLT), under section 241 (1) (b) of the Companies Act, 2013 against Astro has received an interm relief.
The NCLT has reportedly said that the business of Getit Infoservices should continue operations and has set October 17 as the date for next hearing. The bench has also ordered a status quo in the constitution of the board of director and stated that no board meeting can be held till the next hearing.
The petition had sought interim relief, asking NCLT to direct AENL not to dilute its stake. It had also sought status quo regarding the constitution of the board and its assets.
Meanwhile, BJP leader Subramanian Swamy had also sought the intervention of the Ministry of Corporate Affairs (MCA) to prevent the closure of the company and save 4,000 jobs.
In a letter to MCA Secretary Tapan Ray, Swamy asked the Government to consider assisting Askme.com to buy out the 98.5 per cent shareholding of Astro Overseas.
While both the managements are busy hurling acquisitions upon each other, jobs of approximately 4000 people are directly in danger, who are waiting in anticipation for a quick decision to be taken.
Over 650 employees (in the annual salary bracket of Rs 2.5 lakh -Rs 6 lakh) has already quit AskMe recently, sensing troubled times ahead.
However, with NCLT’s intervention, the matter seems to have got a breather of above one month until the next hearing which is due on October 17.
Indiaretailing Bureau, cannot immediately ascertain whether AskMe will be operation till then or not. As of now, the e-commerce website is showing a message that says: “Sorry, high traffic causing delay. Please try again later.”
AskMe was launched in 2010 as a classified portal. In 2012, it came out with Askmebazaar as an online shopping portal focusing on small and medium enterprises. In 2013, Getit acquired AskMe from Network18. Astro acquired a 50 per cent stake in Getit Infomedia for around $20 million in 2010.