Flipkart has initiated a significant cash payout of $700 million to its employees, marking the largest compensation of its kind in the Indian startup ecosystem.
The payout is in response to the separation of Flipkart’s fintech subsidiary, PhonePe, from the e-commerce group, which resulted in a devaluation of Flipkart’s shares.
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Last year, Flipkart and PhonePe underwent a complete ownership separation, allowing shareholders in the Singapore entities of both companies to directly purchase shares in PhonePe’s Indian entity.
Since then, PhonePe had relocated its headquarters to India and raised $850 million in recent quarters to expand its operations, including venturing into e-commerce.
In an email to employees earlier today, Flipkart Group CEO Kalyan Krishnamurthy expressed his anticipation for the compensation.
He further encouraged the team to continue their dedication and determination in achieving the company’s envisioned future and scaling new heights together.
He added: “We have exciting times ahead, and as we continue to grow across businesses, I look forward to your continued dedication and determination to bring about the future that we envision and scale new heights together.”
According to a Flipkart spokesperson, the payout has already been distributed among more than 20,000 current and former employees.
This comes at a time when Flipkart is considering another round of financing, having already raised $3.6 billion in mid-2021 at a valuation of $37.6 billion.
However, SurgeZirc NG gathered from sources that the company may have exhausted its capital.
While Flipkart has been contemplating an initial public offering (IPO) for several years, it has postponed its plans due to unfavorable market conditions.
In contrast, its chief rival, Amazon, is slowing down its growth in India and closing down certain business lines.
Amazon recently announced its intention to invest $15 billion in India by 2030, with a significant portion earmarked for its cloud computing arm, AWS.
The Walmart-backed Indian startup, Flipkart, and Amazon face competition from Reliance, an Indian conglomerate that operates the country’s largest retail chain.
Bernstein, a brokerage firm, projected in May that Reliance, led by Asia’s richest man Mukesh Ambani, will eventually surpass Amazon and Flipkart in India’s $150 billion e-commerce market.
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Bernstein’s projection is based on Reliance’s robust retail network, extensive mobile network, holistic digital ecosystem, and advantageous position in India’s challenging regulatory landscape.
These factors are expected to enable Reliance to dominate the e-commerce market in the long run.
