A decade-old teleshopping and e-commerce portal HomeShop18, once owned by Mukesh Ambani-led Netwrok18, is at the centre of one of the biggest fraud allegations in India.
The firm has not paid about Rs 200 crore collected money for the products sold to customers on behalf of 150 sellers, according to HomeShop18 Vendors Association President Himanshu Khatter.
It was supposed to wire the money after deducting its average commission of 30% to sellers, which did not happen. The dues have been accumulated from March this year till June, when it is said to have closed its operation, added Khatter while speaking at a press conference held on Friday.
Interestingly, when Entrackr team visited the HomeShop18 portal, we found the portal still taking orders from consumers.
Everything was hunky-dowry till February this year. However, sellers started to notice default on payment from March. While those who chose not to sell further proved to be lucky, as many as 150 merchants kept selling only to get stranded with heavy dues since June when Reliance abruptly sold out HS18 to Skyblue Buildwell.
The debacle of HomeShop18 wasn’t sudden. Amidst the high growth of e-commerce, television commerce failed to prosper and lost its lustre. According to an ET Prime report, the firm’s revenue eroded significantly between FY15-18.
After HS18’s took over by Reliance in 2014, its revenue had fallen from Rs 499 crore in FY15 to Rs 166 crore in FY18. Lack of focus, weak leadership and demonetisation almost pushed the TV commerce firm out of business.
Perlis of vendors started after March this year when they first began protesting on the issue of non-payment of dues. Three months later, they also reached out to CFO of the company, who said that the company is talking to Reliance officials for clearing outstanding.
However, according to vendors, nothing happened till date.
Instead of getting visibility on dues, vendors met with another surprise when they realised that Network18 was selling HS18 to a real estate entity Skyblue Buildwell, which as per Ministry of Corporate Affairs (MCA) had merely Rs 7.57 lakh net worth.
According to a TOI report, the MCA filings of the real estate firm showed a decline in its turnover from 1 lakh in 2014-15 to nothing (zero) in FY19.
The findings further raised questions on its immediate acquisition by Skyblue – how come a smaller firm acquire a company which has its value worth over hundreds of crore?
Meanwhile, there is no information on approval from MCA and whether operational creditors were informed about the development. The matter remains to be investigated.
As per Vendor Association, its complaints to MCA, Economic Offences Wing (EOW), the Senior Superintendent of Police, Surajpur have not yielded any results in terms of investigations. The association has also written to the President, Prime Minister, Finance Minister and the RBI.