Gurgaon-based consumer Internet search platform AskMe has shut down its operations and has laid off its remaining staff. AskMe’s ecommerce website is live at the moment but it is not accepting any new orders.
According to people close to the development, the step was taken amidst severe cash crunch, alleged to the unplanned exit of Astro Holdings, its principal investor. AskMe, in a recent letter written to the Ministry of Corporate Affairs and Registrar of Companies, has asked them to ensure that Astro does not exit the country without meeting its liabilities and commitments.
Recently, AskMe saw resignations from more than 650 employees who were in the annual salary bracket of INR 2.5 lakh-INR 6 lakh. To date, Astro has pumped in $119 Mn (INR 800 Cr) in the company according to filings with the Ministry of Corporate Affairs. It was also in discussions with Alibaba and Baidu to raise $200 Mn this fiscal at $1 Bn valuation, to further revamp its etailing business AskMeBazaar.
Related Article: AskMe Principal Investor Astro Holdings Explores Exit
Things got worse after the company’s major investors Helion Ventures and Astro held back their interests towards further funding. The Astro back out from a supposed MBO (Management Buyout) scheduled at the end of July this year just added to the downslide.
The shutdown has left more than 4000 employees, vendors, and other creditors at AskMe and the investor, in a state of panic. Earlier this month, an open letter by AskMe’s employees to Astro Holdings also revealed the inside story.
…your foreign directors were recently replaced with “on hire” CA firms in India. A sudden decision to replace these directors is I believe illegal and will complicate matters further for Astro, a company which is already facing the heat on account of the 2G scam. Astro was chargesheeted in the CBI in Aircel Maxis case for fraud and cheating and had to exit Indonesia for the same charges…..
AskMe.com was launched as a classifieds portal in 2010. In 2012, AskMe came out with Askmebazaar as an online shopping portal focussing on small and medium enterprises (SMEs). Later in 2013, Getit acquired AskMe from Network18.
The portal was operating with over 120K merchants, in over 70 cities, including metros and Tier II cities as well. It also diversified into hyperlocal space with AskMebazaar’s next day delivery capability and in the fintech space with AskMePay’s AskMeFin. It had also invested $20 Mn in online furniture marketplace Mebelkart in August 2015 and acquired online grocery marketplace BestAtLowest.com.
Update 1 – 19th August (20:30)
Astro has shared the following statement, in response to the report:
Astro Entertainment Networks Ltd (AENL) has, since 2010, made substantial investments in Getit InfoServices Pvt Ltd to participate in and support India’s fast growing e-commerce industry.
AENL made sustained and long term investments in Getit totalling nearly USD300 million to date to keep the business afloat during often volatile market conditions. Unfortunately, Getit has not been able to make its business profitable and sustainable despite these huge investments by AENL. An independent review by advisors has concluded that there is little prospect for turnaround and the business is insolvent. AENL intends to appoint a forensic auditor to review Getit’s books and will take appropriate steps based on the results of that audit.
Contrary to recent media reports, AENL has always been a responsible and patient investor in Getit over the last six years making every effort possible to support the business even as other investors withdrew. AENL has at all times been fair, scrupulous and professional in its dealings with the management of Getit. AENL will continue to act responsibly and in accordance with Indian laws over this matter.