Binny Bansal, the co-founder of Flipkart, has resigned from his position as chairman and group CEO of the country’s largest online retailer over allegations of improper personal conduct leading to one of the most high-profile exits in
Bansal’s departure comes less than six months after Walmart Inc acquired majority ownership in the retailer and follows a probe into what the American corporation termed “serious personal misconduct” without specifying the nature of these allegations.
Bansal has denied the charges. “While the investigation did not find evidence to corroborate the complainant’s assertions against Binny, it did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign,” Walmart said in a statement.
Bansal, 37, who cofounded Flipkart with Sachin Bansal — both IIT-Delhi graduates — will remain on the board of the company. In May this year, Walmart paid $16 billion to acquire 77% in the 11-year-old company, making it the largest acquisition in the sector, globally. This valued the homegrown startup at $21billion.
‘Exit will Trigger Questions’
People familiar with the development said the investigation against Binny Bansal began in July and was conducted by an independent law firm. “Gibson Dunn is believed to have undertaken the investigations against the Flipkart cco-founder,” the sources said. “The allegations left me stunned and I strongly deny them. The investigation, however, did bring to light lapses in judgment particularly a lack of transparency, related to how I responded to the situation.
These have been challenging times for my family and me. I am concerned that this may become a distraction for the company and the team. In light of these circumstances, I feel it is best to step away as chairman and group CEO,” Bansal said in an email to Flipkart employees on Tuesday. Experts are of the view that given the high-profile acquisition by Walmart earlier this year and the visibility enjoyed by Binny Bansal as cofounder, this dramatic exit will trigger further questions.
“Very few people will be satisfied with the explanation they have given. Soon, there will be pressure (on Walmart) to put out a full report on this issue,” said Rishikesha T Krishnan, professor of strategy and dean of IIM, Indore. Walmart said that after the conclusion of the investigation, Bansal offered to leave the company.
Walmart, which is the largest shareholder in Flipkart, said that as part of the company’s succession plan, current Flipkart CEO Kalyan Krishnamurthy will hold additional charge of fashion portals Myntra and Jabong. However, both the businesses will continue to operate as separate platforms within Flipkart. Ananth Narayanan, who heads Myntra and Jabong, will report to Krishnamurthy, while Sameer Nigam will continue leading payments arm PhonePe. Krishnamurthy and Nigam will report directly to the board of Flipkart.
Binny Bansal’s departure marks the exit of both founders from Flipkart. While Binny was not involved in the day-to-day operations, he was the face of the company when Walmart bought the company. This was because of Sachin Bansal’s decision to leave Flipkart due to disagreements with the company’s board on his role after the conclusion of the Walmart deal. He (Sachin) had a fallout with Flipkart’s investors, especially Tiger Global’s Lee Fixel, which led to his departure. Binny had to stay back so that one of the founders was there at the time of the announcement of the acquisition.