Will Walmart-Flipkart deal change the face of Indian Startups forever?

Walmart store. Credit Diego M. Radzinschi ALM

Global retail giant Walmart bought Flipkart for $16 billion (1.12 lakh crore) in the biggest ecommerce deal in the world. Nonetheless, the United States brick-and-mortar behemoth has still bagged a significant stake of around 55 per cent. Naspers sold its 11.18 per cent stake in Flipkart to Walmart for $2.2 billion.

"As of now, SoftBank has not exited Flipkart".

It has just been a day after the American multinational retail company Walmart announced acquisition of 77 percent of stake in Flipkart, but the company is not stopping just there. The $2 billion profit would be taxed as per Indian law.

In his leaving statement Sachin sent encouragement to "Flipsters" who have worked under him and said Flipkart "truly upheld audacity and customer centricity... and solved many complex problems for India". This brings an end to the era of Sachin Bansal and Binny Bansal in Flipkart. "India is one of the most exciting markets in the world", said Bob van Dijk, Group CEO, Naspers.

Reports suggest that Walmart's acquisition of Flipkart at a valuation of almost $21billion has generated one of the largest pools of wealth for employees in India's corporate history.

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The report further said, "SoftBank believes in the upside potential of Flipkart under Walmart leadership, which could eventually offer an exit to the remaining shareholders by taking the company public in the U.S.".

"The situation is still very fluid", a source familiar with the development told ET.

Yet another report claimed that while SoftBank supported Walmart's acquisition, the deal had "come together quickly" and, therefore, SoftBank was still in discussions with Walmart to "determine its role in Flipkart going forward". "Soft-Bank's fund is registered in Jersey and they are suffering a huge tax liability because there is no DTAA protection with Jersey". To avoid the short-term taxation issue, SoftBank may hold the Flipkart stake for 6-12 months.

Employee wealth created by privately held homegrown companies in India's digital ecosystem is around $4-5 billion, according to executive search firm Longhouse Consulting and out of that Flipkart alone accounts for over 20 percent. "Following the close of the transaction, we also will be ending our current strategic relationship with Flipkart, which includes unwinding our commercial agreements with Flipkart and terminating Flipkart's license to use the eBay.in brand", said the company in a statement.

U.S. retail giant Walmart hopes to become a success story in India following its US$16bn purchase on Wednesday (9 May) of a majority stake in Flipkart, India's biggest online retailer, according to media reports.

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