Snapdeal-Flipkart merger: Sellers cite unpaid dues, ask Modi govt to halt the deal

An association of online vendors which has a backing of almost 2,000 sellers has written a letter to Commerce and Industry Minister Nirmala Sitharaman requesting to hold the merger of e-commerce firm Snapdeal with Flipkart, on account of pending financial dues.

The All India Online Vendors Association (AIOVA) has requested the government for a hold on the deal subject to an approval by at least 75 percent of sellers doing active business on the Gurgaon-based company’s platform, citing pending dues and financial disputes.

In a letter, reviewed by Moneycontrol, the association has said that over 500 sellers ‘have complained regarding unsettled matters’.

"Jasper Infotech Pvt Ltd (Snapdeal) is on the verge of shutting down or merging with another e-commerce marketplace due to lack of funds," the sellers claim.

“We would like to inform you via this email that more than 500 sellers have complained to us regarding unsettled financial matters with the current management of Snapdeal,” states the letter e-mailed by the seller association to the Government.

(Copy of the e-mail)

The e-mail was addressed to Tapan Ray, Secretary, Ministry of Corporate Affairs and Nirmala Sitharaman, Commerce Minister of India.

“Our members are already riling with the losses faced in Askmebazaar. Now they feel they will face loss in Snapdeal under the new management. We, therefore, request you to hold the winding down/sale /merger of the above-mentioned company subject to approval by 75 percent of sellers doing active business on the platform,” the online sellers have appealed in the letter.

The association claims that it was asked by Ms Sitharaman, to approach the Corporate Affairs Ministry regarding dues related to Askmebazaar, where the vendors are yet to receive a settlement.

The association claims that it had compiled and submitted a list of such unsettled financial matters to the management of Snapdeal informally in March.

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“However they never acted on the same,” the letter states.

Responding to the claims made by AIOVA, Snapdeal in an e-mail said "Payments to sellers are made as per pre-defined payment cycles and these continue to be made per normal practice. It should be clear that payments are made only as per contractual commitments and in accordance with seller policies. Robust grievance redressal mechanisms exist to address any escalations from individual sellers."