Cash crunch hits another e commerce company as it shuts down with 4000 employees losing job.
It is another sad chapter in the Indian startup ecosystem as the e-commerce site and consumer internet search platform ‘AskMe’ has shut down after not being able to pay its employees and manage other costs running the business.
The Gurgaon-based company’s e-commerce website is still live but they are refusing all new orders. Sources close to the company revealed that this unplanned shut down is owing to the sudden pulling out of its principal investor, Astro Holdings.
Last month, Malaysian billionaire Ananda Krishnan-led Astro Holdings pulled out of AskMe Group after a long-drawn battle with minority shareholders. The company held 97% stake in the e-commerce venture.
Noticeably, Astro Holdings made its last cash investment of around Rs 150 crore month. AskeMe was previously owned by Getit Infomedia. Astro acquired a 50% stake in Getit Infomedia for around $20 million in 2010.
At the inception of August this year, unnamed employees at the AskMe Group wrote an open letter to Astro asking it to pay all outstanding dues till July 2016. The open letter came 2 months after 300 to 650 employees were reportedly laid off at the company.
Following this, on August 9 , the management at AskMe sent an email to all its employees asking them to get in touch with Astro to get their salaries. AskMe conveyed to its employees that Astro owned it $5 million . The email listed the names, phone numbers and email IDs of the Astro management for employees to contact.
Taking the issue further, AskMe had also written to the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (RoC) seeking interference in ensuring that Astro did not exit the business without paying its liabilities.
A similar incident happened recently with the online fashion portal Jabong’s parent Rocket Internet which had to sanction a forensic audit by PwC.
However, in the wake of the recent events, Astro will also appoint a forensic auditor to review Getit’s books and take actions accordingly.
AskMe.com was started as a classified portal in 2010. The company launched its online shopping portal Askmebazaar in 2012, which focused on small and medium enterprises. Later in 2013, AskMe was acquired by Getit.