Startups People

It would be difficult to get a new buyer for AskMe: Sanjiv Gupta

19 Oct, 2016

Sanjiv Gupta, former managing director and CEO of Getit Infoservices Pvt. Ltd, that runs e-commerce brand AskMe, is engaged in a fierce battle with the controlling investor Malaysian digital services and telecom conglomerate Astro. AskMe suspended operations following a fund crunch when Astro stopped funding the company, leading to non-payment of salaries and dues. The fate of the company hangs in balance as the matter is now before the National Company Law Board Tribunal (NCLT). Gupta in an interview with Techcircle is still pushing for the management buyout which the investor has rejected. Excerpts:

How do you respond to Astro's position that your proposal for MBO wasn't viable?


The last round of investment by Astro in Getit in early 2016 was done at approximately $375 million. The valuation was conducted by EY. After the sudden refusal to honour its funding commitments in April 2016, the net worth of the company turned negative. The objective of the MBO was to keep the company afloat.

It has now emerged that you have offered to buy the company for $1 and wanted Astro to clear all dues before the sale process.

The alternative to the MBO was the closure with the 99% owner being responsible for the closure costs. The closure cost was estimated at $76.5 million and is documented and accepted by Astro. The closure would have resulted in Astro losing its investment of $300million. I offered to take over the company and save Astro 30–50% closure costs. I offered to issue compulsory convertible preference shares to enable them recapitalise their investment in two years after the company has hit the growth trajectory.



I offered to bring an investor who believed in the company and would invest $100-150 million but every investor wanted to invest in a company free of Astro's presence. The $1 was just a nominal amount for doing the transaction. All money, including that of investors, was to be put in the company.

Astro says it owes no money to Getit Infoservice which is contrary to what you have been saying.


Astro used to commit fund into the company on the quarterly basis, based on performance in the recent quarter/past. They committed $23 million funding for May to July 2016 quarter which is well-documented. Astro didn't adhere to this funding commitment and also didn't approve our MBO proposal, which resulted into the non-payment of salary to 4,000 employees and the vendors.

Astro is saying they would leave it to the court and liquidator to find a new buyer in a wind-down process. Your view on this:

It would be very difficult to get a new buyer for the defunct businesses during the court administered sale. I would again urge Astro to consider our MBO proposal so that the company operations can be re-initiated and the possible wind-down be avoided.


An observation is that it is not just investor-management differences and fund crunch but misplaced priorities such as huge ad spends and flawed business model that led to the current situation.

I believe that the company has been able to create successful e-commerce ventures of offline to online hyper local delivery models of next day delivery and grocery. These models are capital light—no capex, no warehouse, no inventory model. The GMV has grown by 10x over the last one year. Despite multiple players, these e-commerce ventures have been able to create a niche for themselves and have grown to become the No. 4-5 players in the industry.

Astro has time and again said the business has become insolvent despite their $300 million investment into the company. Could you tell us why such a well-funded company couldn't become self-sustainable and revenue generating yet?


Our investment is a tiny fraction of the other e-commerce industry players. Our capital and financial efficiency is best among the industry players. The same has been vetted and audited by one of the Big4 companies. Astro funded the company for only six years from October 2010. The e-commerce business was started in the beginning of 2015 and the grocery expansion was added in June 2015 with mobile payment joining the portfolio in October 2015. All these business decisions were taken after having approval from Astro Overseas Limited's top functionaries. No business, let alone an e-commerce business can be profitable in one year. In our MBO proposal we had shared with an incoming investor that the company would break even in two years.

How would you respond to Astro's claim that they stopped funding the company since they saw little progress?

As stated earlier, the company has grown 10x in terms of GMV on the platform during 2015. 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.


Going by what you said—Astro committing future support, renewing your contract and approving business plans—everything seemed hunky dory. Then, according to you, what triggered the current crisis at Getit?

It all started with souring of relations between T Ananda Krishnan and his most trusted lieutenant of decades. This was followed by CBI charge sheeting them in the 2G scam and issuing of warrants thereon. So, the lower management was suddenly conveyed as a matter of urgency to withdraw all investments from India in the end of April 2016. In spite of an understanding between the management and Astro over an amenable separation, there were no sharp differences till last week of July. We had agreed in writing about their commitment to fund AskMe till July 31. The complete discussion on MBO and minutes of the meeting outlining final steps on July 18 is recorded.

It looks it would require at least 4-5 court sessions before an order is passed. That means, the employees and vendors would need to wait that much longer for a solution to evolve.

That is not true. The first order of the NCLT asks the company to continue the operations. Despite that, Astro has unilaterally and without following proper procedure ceased the operations. Their assets should be attached to pay their commitments.

If AskMe goes through a wind-down process what would be the consequence for its 4,000 employees and 1,000 vendors. Everybody is concerned when they would get their dues. What do you have to tell them?

Astro is the owner of the business and has made written commitments of funding which they have to honour. Matter is sub-judice.