Flipkart and Ola batting for law against Capital dumping

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Krishnachaitanya Potturi, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur.


Recently, we saw the headlines that Flipkart’s Sachin Bansal and Ola’s Bhavish Aggarwal are trying to seek government protection against capital dumping by global rivals. Now, prominent venture capitalist Vani Kola, founder and managing director of Kalaari Capital has also joined the controversial debate.

Bizarrely, they never felt the need for any playing field, level when Ola and Flipkart were busy pulverizing other local players market with foreign funds. A total of $3.2 billion in foreign funds has been invested in Flipkart and is even registered in Singapore. The majority of Flipkart’s capital is in the form of foreign funding. Founders Sachin and Binny Bansal together hold only a 30 percent stake in the company. Ola’s Bhavish Aggarwal has secured sufficient foreign investment to the point that he and his partner Ankit Bhati currently own only 10 percent of the firm’s shares.

Flipkart, Ola and many, many other startups in India have entirely been set up on a copy-paste model. Flipkart took 9 years and US$3.5 billion to grow to where it is. Amazon simply took less than $2 billion and built a larger and better-loved business in India than Flipkart that too in 1/3rd the time. Ola went the same path. It raised $1.3 billion and spent a lot of that to build a business that it asked for $5 billion to sell. Uber  just spent 1/10th that amount – i.e. around $500 million to build a larger and more loved business in India than Ola, once again, in 1/3rd of the time.

Current investors in Flipkart have cut its on-book valuation from $15 billion to $5 billion.  Ola and Snapdeal have been devalued by their investors too. Hence the request to grant protection and ask the government to let them put foreign money in Flipkart and Ola and not let foreign money go into Amazon and Uber. While the absence of Indian-ness in a Flipkart or Ola works as a fitting response, the allegation has implications beyond an India-versus-others debate. ‘capital dumping’ is no longer about MNCs versus Indian companies but bigger versus smaller players, regardless of founder origins and nationalistic pleas.

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