Walmart's Flipkart buy rekindles hopes for relaxation of India's FDI rules

Flipkart-Walmart deal an incredible outcome for the company's believers Paytm's Vijay Shekhar Sharma

Traders body CAIT today said Walmarts USD 16 billion acquisition of home-grown retailer Flipkart will affect Indias retail sector "very badly" and demanded scanning and scrutinising the deal from "different angles" by the government.

Gibson Dunn Hong Kong head Kelly Austin is leading a team representing Walmart on the deal that includes white-collar partners Michael Farhang and Joseph Warin, while leading Indian firm Shardul Amarchand Mangaldas & Co is also advising Walmart on the deal.

Mahajan also alleged that Flipkart's operations are "not beyond suspicion" and that its group companies have not filed their statement of accounts for the year 2016-2017, 2015-2016 and have only made partial disclosures. The company warned it expects the deal to reduce fiscal 2019 earnings by 25-30 cents per share if it closes in the second quarter.

Chittaranjan Mohanty, an alumnus of Xavier Institute of Management, Bhubaneswar (XIMB) who now runs an online vegetable delivery start-up, Hi Fresh, is all praise of Flipkart's business model and feels the deal will inspire budding entrepreneurs.

And Walmart has just provided a genuine multi-billion dollar exit to many of those investors, strengthening the case for even more investments in India's online commerce startup scene. Other major investors, such as Tiger Global, Tencent and SoftBank, will all retain their shares in the company.

Another Accel portfolio company, US-based ed-tech firm Lynda.com, was acquired by social networking platform LinkedIn at a valuation of $1.5 billion.

A day after USA retail giant Walmart struck its largest deal with a big ticket investment in Indian online marketplace Flipkart, a right-wing Hindu group that fears small traders will suffer staged a protest in New Delhi calling for the deal to be scrapped. "It is pretty clear that this (deal) is good for customers and would create jobs and help society", he said at a select media roundtable here.

Shardul Amarchand Mangaldas corporate head and partner Raghubir Menon led for Walmart. That joint venture was called off in 2013 and its presence in India has remained largely static, at least partly due to restrictions around foreign investment in physical retail.

"In this entire deal which saw Flipkart's valuation at around $20.7 Bn, there is still no tax clarity as the treaties signed by India with Singapore and Mauritius changed past year".

While Walmart and Flipkart will leverage the combined strengths of both companies, both will maintain distinct brands and operating structures.

Walmart has renewed its focus on catching up with rivals in key global markets.

Accel India operates under US-based Accel's banner but is managed and run independently. Youngsters from Odisha were also looking up to the Flipkart founders - Sachin Bansal and Binny Bansal and their story, which according to them a "successful" one. Big players like Sequoia Capital had passed up on the opportunity to invest in Flipkart several times.

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