In a bid to simplify its corporate structure ahead of its speculated IPO, ecommerce marketplace Flipkart has bought back its logistics service company from WS Retail.
According to Mint, the acquisition has been made through a new entity called Instakart Services Pvt Ltd, which was registered in June and has Ankit Nagori (Chief Business Officer, Flipkart) and Rajnish Singh Baweja (Finance controller of Flipkart) as the company’s shareholders and directors.
Earlier in January this year, WS Retail was looking to spin off its logistics arm, Ekart, into a separate entity to make the privately held company comply with regulatory requirements of different states.
With this deal, now WS Retail will only have trading business which is estimated to gradually sore down as Flipkart shifted to a marketplace model from a inventory-led one in 2013.
Related: Flipkart Plans To Reduce Reliance On WS Retail To Focus On Marketplace Model
Understanding The Operation Of WS Retail Services Pvt. Ltd. As A Subsidiary of Flipkart Pvt. Ltd
Flipkart created WS Retail in 2009 as a seller on its site due to strict FDI rules. WS Retail bought goods from Flipkart India Pvt. Ltd, the B2B (business-to-business) arm of the main group holding company, and sold the same goods to customers on Flipkart’s site. WS Retail also owned and ran Flipkart’s key logistics business called ekart that delivered products to customers.
Until 2012, WS Retail was owned by Flipkart co-founders Sachin Bansal and Binny Bansal. However, they were forced to sell their stakes to a group of Indian investors which led to their resignation from the board in 2012.
After the stake sale, two of Flipkart’s early employees, Sujeet Kumar and Tapas Rudrapatna, controlled roughly 46% of WS Retail. Kumar was the de facto head of WS Retail and ran the logistics business until he left the company earlier this year.
WS Retail was legally separated from the Flipkart founders and its venture capital investors two years ago and earned above $475 Mn (INR 3,135.3 Cr) in 2013-14.
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