Following failed attempts to coerce its principal investor Astro out of a $5 million sum, AskMe has descended into a state of suspended operations and overall chaos. The company portal still appears to be active, however operations have been suspended and there has been no official word upon when — and if — the situation can be resolved beyond a letter to the Government of India, asking it to step in.
Apparently, Astro Overseas Ltd (AoL), which is the majority shareholder in Getit infoservices — the AskMe parent — is looking to wash its hands of the company and make a quick exit. While we have had indications that not all was right over at the e-commerce portal when over hundreds of its employees were either laid off or turned in their papers, this supreme lack of confidence by its principal investor may just be the last nail in the coffin.
Astro Overseas is itself backed by Usha Tegas group and sovereign fund Khazanah Nasional of Malaysia. Meanwhile, AskMe is doing all it can to ensure that Astro is not able to make a quick exit from the country. The company has approached the Ministry of Corporate Affairs (MCA) and Registrar of Companies (RoC) and asked them to ensure that Astro meets its liabilities and commitments before bowing out of the company. As per the letter,
Getit Group also does not have the financial capacity to pay to the creditors as the total liabilities of the group have exceeded the assets by around $50 million and Getit Group has no tangible assets that could cover these liabilities.
Things actually became pretty desperate before everything finally spilled out in the open. Astro’s relationship with AskMe stems from back in 2010, when the former bought a 50 percent stake in the latter’s parent, Getit, for a $20 million sum. Astro later defaulted on a $5 million payment it was supposed to make to AskMe, leading the company to direct its employees to Astro management for their salaries. A markedly sad state of affairs for any company.
Meanwhile, this is not the quarter heralding troubled times for Astro. The company is also embroiled in money laundering in the Aircel Maxis case and has been charge sheeted by the CBI. The company has also defaulted upon payments for various services it acquired from Indian companies, who are now looking to make it pay before it beats a hasty retreat out of India.
AskMe employees, numbering in the thousands have now been left to the mercy of the judiciary system — along with hundreds of thousands of merchants, vendors and creditors. The company has — had? — operations in over 70 metros and tier 2 cities and there was talk of AskMe raising $200 Mn this fiscal quarter from Baidu and Alibaba at a $1 Billion valuation. The company has varied interests as well including stakes in furniture marketplace Mebelkart and online grocery marketplace BestAtLowest.com.
However, things don’t appear to be looking to good for the portal now. The website is currently un-operational and attempting to place a new order leads you to the following message.
We are not accepting any orders at this moment. We will be back soon. Thanks.
Meanwhile, the company has brought in the Indian government for arbitration. Let’s hope that the GOI can prevent Astro from pulling a fast one like it did in Indonesia before exiting the country in a hurry. Meanwhile, with established companies like AskMe dropping out of the game, the situation gives us yet another look at how far the e-commerce sector has to go before reaching maturity in the country.