E-commerce
A Morgan Stanley report had suggested that Walmart may have a rethink on its acquisition of Flipkart and could even exit the venture.

Trying to do damage control, Flipkart CEO Kalyan Krishnamoorthy has immediately reacted to the Morgan Stanley report that had suggested that Walmart may have a rethink on its acquisition of Flipkart and could even exit the venture. The CEO has described the report by the top Wall Street investment consultancy firm as having no substance in it. According to him, Walmart is fully committed to the Indian market and has no plans to leave.

These comments came from Kalyan Krishnamoorthy in a communication he has addressed to the Flipkart employees, where he has mentioned that Walmart takes longer term view of the business and the investment in it and any short-term hiccups won’t impact Walmart’s confidence. The hiccup mentioned in his letter possibly refers to the recent intervention by the Indian government asking the ecommerce firms to strictly abide by the FDI rules and not to use any backdoor approach the circumvent them. Now, observers feel, rival Amazon might have been more seriously impacted than Flipkart.

The government’s action was being criticised in some quarters as creating a kind of uncertainty for investors in the country by changing its policies and regulations. But the government has stood by its position that there has not been any shift in the policy and that it is only the ecommerce firms that have violated the stated policy that sellers on the retail ecommerce platforms cannot be those with links to the owner of the ecommerce firms, in this case, Flipkart and Amazon. Only an anomaly was sought to be corrected, the government has explained.

The question is having invested billions of dollars into the business in India, if they were to withdraw the deep discounts, will they be able to retain the same number of customers and volume of business? If not, how are these international companies going to convince their shareholders that the billions they have invested in the Indian market will give them the returns they had expected?

We may not have heard the last on this story yet.