Binny Bansal, co-founder and chief executive officer of Flipkart Group, the Indian e-commerce company Walmart acquired this year for $16 billion, has resigned after an investigation into allegations of misconduct, Walmart said Tuesday.
Bansal, 37, denies the allegation.
In a news release, Walmart did not specify the exact nature of the claim against Bansal, describing it only as "serious personal misconduct." The Bentonville retailer said that while the independent investigation found no evidence to corroborate the complainant's claim, "it did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation."
"Recent events risked becoming a distraction," leading to Bansal's decision to step down, Walmart said.
Bansal said in an email sent to Flipkart employees that he will remain on the group's board of directors and retain his shares in the company. Walmart acquired a 77 percent stake in the company in a deal that closed Aug. 18, leaving the rest of the shares to Bansal and others including Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
Kalyan Krishnamurthy, chief executive officer of the group's subsidiary Flipkart, will now report directly to the group's board, Walmart said. He joined Flipkart in 2013 as interim chief financial officer and was promoted to his current position in January 2017 when Bansal moved up to head Flipkart Group.
Walmart said it will speed up a succession plan that's been in the works "for some time" as Bansal "has been contemplating a transition." Indian news organizations reported in September that Walmart was considering replacing Bansal, who was no longer involved in day-to-day operations, and that Krishnamurthy was the retailer's prime candidate.
Although Walmart operates 21 wholesale stores in India, it could not sell directly to consumers because of government regulations on foreign retailers that sell more than one brand. Acquiring a majority stake in Flipkart gave it direct access to a burgeoning middle class in an e-commerce market projected to grow from roughly $20 billion to about $200 billion by 2027, according to investment firm Morgan Stanley.
The Flipkart deal is highly unpopular in India, where it has sparked numerous protests by merchants and others who believe Walmart's entry into the marketplace will hurt homegrown businesses. Other global players in Indian e-commerce include Amazon.com, which has pledged to invest $5 billion in India, and Chinese e-commerce giant Alibaba.
Brett Biggs, Walmart's chief financial officer, told investors last month that the retailer had lowered its guidance for the current fiscal year by 25 cents because of expenses related to the Flipkart transaction. He added that the company had expected to make the revision once the deal closed.
Walmart's third-quarter earnings, which will be released Thursday, will include Flipkart's financials for the first time. They will be reported as part of Walmart's international division.
Business on 11/14/2018