Astro backed out, trying to flee India: AskMe CMD Sanjiv Gupta

Priyanka Sahaymoneycontrol.comSanjiv Gupta, chairman and managing director at AskMe which ran e-commerce businesses such as AskMeGrocery, AskMeBazaar, AskMePay is blaming his main investor Malaysia’s Astro for the sudden closure of business. Salaries of about 4,000 employees are yet to be paid since three months. The e-commerce company which was surviving on investor money to pay for operational expenses, has vanished into thin air. Gupta himself has chosen to fly out of India. He answers these questions via e-mail. In an exclusive interview over e-mail to moneycontrol.com, he squarely blames the Malaysian investor which has so far invested about US$300 million for closure of the company. Excerpts from the interview: Astro has claimed that, in 2015 itself, it had informed the management of Getit that they were not prepared to fund the business and that management should find alternate means to source funding. Please clarify if this is correct. Also in that case did AskMe put a cap on its spending across marketing, new product launches and different operation expenditures? I would request you to kindly go through the National Company Law Tribunal petition. Astro is 99 percent owner of Askme. Why should it tell management with 0.06 percent that it plans to exit? They could have closed the business in 2015 itself....what has management got to do with it?But they did not. Because they had full faith in the our (ecommerce) business model. Astro told us on April 30th that they were unable to fund the business beyond July 31 on inexplicable business. That is why we offered the Management Buy Out. Let Astro produce the board minutes for last 12 months where funding plan for next five years was approved by Getit board and Astro. And also the MBO correspondence. It belies all reason as to why they would not accept the MBO. We had a backer but the proposal did not pass muster with Astro in spite of several options being given. Astro being a majority investor should have initiated stake sale if it wanted to exit in the middle. How could we have led that being minority ones. Still we initiated talks which did not move beyond the drawing board thanks to Astro's chequered history in India in the 2G case. It became all the more difficult to evince investor interest when Astro heads in India including their global chairman got chargesheeted by CBI.At a point in time, when the lives of 4,000 employees are at stake, what is the current way out?Astro is the owner of the business and has made written commitments of funding which they have to honour. Matter is sub-judice. In that case, despite knowing that Astro was involved and charge-sheeted in the 2G case, why did Getit founders kept on diluting their stake to Astro and getting their money than approaching other investors? Why didn't they bring other foreign venture capital investors in Getit Infoservices Pvt Ltd. when there were a plethora of them willing to invest in Indian e-commerce sector in 2012-2014?Astro had taken majority control in October 2010 itself and wanted to make this as their subsidiary to launch their digital initiatives in India. So they continued pumping money telling the promoters not to worry about future funding as they had deep pockets. Even as late as 2015, they were saying that they were looking for strategic partners in the field of e-commerce and mobile payments. Astro has also accused the group of being more focused on marketing than the core business. How do you see this allegation? What amount of the overall fund raised has so far been invested in marketing and brand building exercises by the group including on Bollywood stars? According to you, how important were television commercials and other branding activities for the group? We must understand that 2015 was the year of boom for ecommerce companies. We allotted significant budgets for marketing and new acquisitions to scale up our business. And, all these strategies were duly sanctioned by Astro. It’s common wisdom that we needed to get everything except daily office expenditure and sundries approved from our majority investor. Their directors were on our board who were fully aware of the expenditure. Ad spends were needed as per what we felt. As per an independent advisor report, we were the lowest in the country. The expense audit report was commissioned by them. What were the key performance indicators set by the investors for the different businesses of Getit? How often were the companies able to achieve those goals?These numbers are captured in the monthly performance reports sent out by CFO on which basis further funding was approved. We must have achieved something good since Astro and Getit board renewed my contract for next five years in April 2016 with enhanced remuneration with retrospective effect from 2015. What has led to your immediate resignation from the board?An abrupt pullback on funding even though they has signed an agreement detailing funding the company till July 31 leading to a sudden closure of business. As highlighted in a recent judgement by the NCLT, I have stated that I was forced to resign due to unpalatable circumstances. Even my resignation was surreptitiously updated on the website. According to you, what has been the prime reason behind all these issues between you and your investor? Was it possible to be avoided?Astro is chargesheeted in the 2G scam and are absconder in that case. Now they are trying to flee the country without paying dues and hiding behind technicalities. Please note that Astro has reported Askme as a subsidiary for last 3 years in its financial results and has given letters to the auditors including PwC that they are responsible for all operational costs. An MBO could have progressed but they halted it. Neither were they able to get an investor from outside. Why did the group push itself to a point where it was not able to pay even the salaries of its employees? What was the reason behind not suspending the operations early on?The only reason is Breach of funding agreement by Astro as per July 31. Our working capital requirement was not met by them leading us (AskMe management) to leave our employees and vendors disappointed. During all these years, did you experience an ideological difference with the investors (Astro)?They were majority owners and were funding the business for last six years. They could have removed management whenever they wanted to if there were "differences"Astro has said that the current proposal for management buyout is not viable. Do you plan to revise the same? What money do you plan to offer to Astro for the MBO?Our offer is clear and we have several times offered to sit across with a mediator and solve it and negotiate. We have given several options to choose from. But they seem to be disinterested. In absence of any conclusive discussion on the matter we cannot talk about the payouts. It's not possible. priyanka.sahay@network18online.comAlso read:How the AskMeBazaar scam unfolded 'Am no longer an employee, have quit': AskMeBazaar CEO With no management, employees can’t even resign or get fired! In dire straits: Employees threaten suicide in emails to CMD AskMe scaled too fast and ran out of money 'I might have to sell my house to pay debt': AskMe seller