Flipkart may be liable for capital gains tax

End of Day Wrap-up #Flipboard #Walmart #Softbank #TigerGlobal #SachinBansal #GST #GSTCouncil #SEBI #US #SaudiArabia #Oil #OPEC #Russia #Moodys #Fitch #Transfin

Sachin and Binny Bansal, the two former Amazon.com personnel, founded Flipkart in 2007, and just like their United States rival, started by selling books.

Both sources said that Flipkart Group Chief Executive Binny Bansal held a closed-door meeting with the firm's top leadership at its Bengaluru headquarters on Monday, and one added that Bansal said that Flipkart co-founder Sachin Bansal would exit after the Walmart deal is sealed. Last month Amazon Mr. Bezos said that Amazon.in is "the fastest growing marketplace in India". This means the deal is likely imminent this week itself. It hits $20 billion valuations this year which is greater than $12 billion in the previous year. Even as Walmart is all set to enter the ecommerce sector by becoming the new owner of Flipkart (acquisition talks are on), the latter appears to be saying goodbyes to many of its investors. Amazon is out of the running unless Walmart hits unforeseen trouble.

Walmart India now operates 21 B2B Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states in India. The stake could have generated $4 billion in the Walmart new deal. The FDI rules permit it, but there are major reasons to worry about letting in a behemoth of a commerce enabler whose links to China's cheap goods will lead to flooding of what are just alternatives to existing goods made in India. Sachin Bansal stayed as executive chairman. Early investors like Tiger Global and Accel Partners will retain some small shareholding along with Tencent.

South Africa's Nasper Ltd is largest shareholder in Flipkart after SoftBank and Tiger Global. Flipkart's board ultimately decided a deal with Walmart is more likely to win regulatory approval because Amazon is the No. 2 e-commerce operator in India behind Flipkart and its primary competitor. The takeover would see Flipkart selling over 75% of its equity to a consortium which will also comprise of Google's parent company, Alphabet Inc. This would see current stakeholder's share at Flipkart reduced to under 25%. Walmart is the potential beneficiary of Flipkart shares' deal.

The first billion-dollar Indian e-commerce company, Flipkart sells 8 million products across 80 plus categories.

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Could the numerous hurdles to this deal be a sign for Walmart not to pursue this transaction and burn cash in a company that has only done so (burn cash) since inception? The trader community, a core BJP constituent, is already in disarray because of GST and DeMo will not take kindly to this deal. SoftBank reportedly was said to be in favor of the proposed Amazon deal. It wanted the "unholy nexus" to be "scanned and stopped" and wondered why the government was "keeping its eyes and ears shut" despite knowing the "intent and hidden agenda of companies like Walmart".

According to a Reuters report, Flipkart will hold a townhall for employees on Friday where Doug McMillon, president & CEO of Walmart Inc, is likely to be present.

Walmart will get 60% of the acquisition. It had acquired Jet.com for $3.3 billion in 2016.

Walmart clearly sees India as a valuable component of its global growth - so valuable that the retail giant was willing to sell its United Kingdom grocery subsidiary Asda to Sainsbury's for approximately $4.1 billion. In April, the company agreed to cede control of its United Kingdom grocery chain Asda, merging it with retailer Sainsbury while retaining a 42 per cent stake. In 2013, it pulled out of its wholesale joint venture with Bharti Group.

There's no denying Walmart has shown seriousness in investing for the Indian market in terms of cold chains, warehousing, liaising with kirana stores and sourcing for its global operations.

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