Snapdeal

Exclusive: Snapdeal turns down ShopClues deal

Snapdeal

Snapdeal has decided to pull out of discussions relating to the purchase of ShopClues. According to sources privy to the proceedings, the findings of the due diligence report had revealed lapses which materially increased the risks for any potential buyer. 

“In addition to the unquantified risks, the outstanding liabilities are in the range of $40-50 million, out of which at least $25-30 million are payable immediately to operational creditors including marketing, logistics, and technology vendors,” said two sources referred above.

Salaries for the senior staff members are also in arrears for the past few months now, they added. However, ShopClues has denied this by terming it entirely speculative.

“None of the current investors are willing to fund these liabilities, which accrued on their watch,” added sources. Tiger Global has shifted its focus to the B2B segment and is not interested in ShopClues anymore. Helion Venture Partners has practically wound up operations in India and is no longer active in the market. 

Nexus Venture Partners, which was nudging Snapdeal to takeover ShopClues, is an early stage fund and has no appetite to increase exposure in ShopClues. GIC, another Shopclues investor, isn’t particularly focused on the Indian market.

Snapdeal, on its part, was said to be more keen on investing in streamlining and investing in the growth of the business, rather than allocating funds to clear old liabilities.

The apathy of the current investors is compounded by the empty coffers at ShopClues, which is spooking employees and partners. According to a current employee, who would not be quoted for obvious reasons, “The company was unwilling to clean up its act and was sleepwalking to its doom. Why did we let things get to this point?” 

Already, ShopClues has seen most of its senior management leave and the skeletal senior staff now remaining is working without salary or clarity around the future.

Entrackr had reported about the massive difficulty that ShopClues could find itself in if its deal with Snapdeal did not fructify. The worst case scenario seems to be coming true

Over the past few months, ShopClues orders have shrunk to about 15,000 a day, and continue to decline steadily. Its social commerce platform EzoNow is also struggling in the midst of well funded social commerce focused companies.

Sources aware of the discussions indicate that ShopClues was also exploring merger options with niche platforms like Craftsvilla, Voonik and Limeroad, all of which have shown no appetite to absorb the large quantum of losses. 

In recent weeks, the founders have also reached out to Paytm-Paytm Mall for a distress sale. “Paytm is being tentative given an ongoing forensic audit at Paytm Mall and also because of the overall debacle of its own marketplace business,” emphasised sources. Other companies like Amazon and Walmart may also hesitate given their high sensitivity to diligence issues. Things aren’t looking great for Shopclues.

Responding to Entrackr’s detailed questionnaire, ShopClues has deemed everything as speculation while Paytm Mall said that it’s not in any conversation with ShopClues for acquisition. Snapdeal is yet to respond to our questionnaire. We will update the post as and when it responds.

Snapdeal

Exclusive: Snapdeal turns down ShopClues deal

Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Below is the bank details:

 
Amount: INR 3,00,000 + GST (TDS to be deducted 2%)
Bank Name: ICICI Bank
Account Type: Current
Account Name: Bareback Media Private Limited
Account Number: 002105023595
IFSC Code: ICIC0000021
 
Kindly make the payment to confirm your seat for Unicorn trip 2.1. For any other queries/concern: pls drop a email on: [email protected] or [email protected]

Overcome FOMO
With Our Daily Newsletter

X