The chief executive and co-founder of India’s Flipkart Group, acquired in May for $16 billion by Bentonville, Arkansas-based Walmart with 77 percent controlling stake,announced last week that he was stepping down amid an investigation into “serious personal misconduct” allegations.
The retailer announced Nov. 13 that the resignation of Binny Bansal takes effect immediately.
In a press release Walmart-Flipkart said Binny Bansal had been an important part of Flipkart since co-founding the company, but in the wake of recent developments, Bansal decided to step down.
“His decision follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct. He strongly denies the allegation. Nevertheless, we had a responsibility to ensure the investigation was deliberate and thorough,” the press release said.
“While the investigation did not find evidence to corroborate the complainant’s assertions against Binny, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign,” the press release added. Walmart declined to provide any detail beyond what was said in its statement when reached by Washington Post for comments.
Binny Bansal, 37, expressed concern to Flipkart employees in an email, saying that the incident would become “a distraction” for the team at the company he and his IIT-Delhi batch mate Sachin Bansal co-founded in 2007.The email was obtained by The Washington Post.
After Walmart acquired its stake, Sachin Bansal stepped down from the company and Bansal became CEO.
The two worked briefly for Amazon.com in India and started their business selling books before diversifying into other goods. The Post report said now Flipkart and Walmart are engaged in an intense competition with Amazon for e-commerce dominance in India.
The Post report said based on knowledge of the people familiar with the matter, that the accusation against Binny Bansal relates to alleged sexual misconduct that took place several years ago and was brought to the company’s attention this summer after the announcement of the deal with Walmart, according to the people familiar with the matter.
Binny Bansal did not respond to the paper’s several requests for comment made via email and through an aide.
Walmart’s $16 billion acquisition was the biggest in Walmart’s history, as the company staked its claim in the lucrative Indian market, which boasts 1.3 billion people and a fast-growing economy. Flipkart’s high price tag caused Walmart to lower its earnings forecast for fiscal year 2019. The Post report said acquiring Flipkart was a key move for Walmart as it continues to battle with Amazon.com for a share of the e-commerce market, a rivalry that escalated when Walmart bought Jet.com for $3.3 billion in August 2016.
Walmart said that Binny Bansal had been “contemplating a transition for some time” and the business had been working on a succession plan, which has since become accelerated.
Walmart said Kalyan Krishnamurthy will continue to be CEO of Flipkart, which will now include Myntra and Jabong, continuing to operate as separate platforms within the Flipkart business.“Ananth Narayanan will continue providing great leadership as CEO of Myntra and Jabong and will report into Kalyan. Sameer Nigam will continue leading PhonePe as CEO. Both Kalyan and Sameer will report directly into the board,” Walmart added in the statement.
The Post quoted Satish Meena, a retail analyst at Forrester Research, as saying that Bansal’s role as chief executive of Flipkart Group meant he had stepped back from overseeing the day-to-day operations of the company.
“Not much is going to change operationally for the company, but this will be a distraction for some time,” Meena said. Flipkart is “the biggest story in India when it comes to start-ups,” Meena said, and other companies see it as a role model. “These allegations might change things a little bit.”