The management of AskMe had proposed a buyout offer as "the chequered past" of the majority investor Astro discouraged other investors from associating with the company, said Sanjiv Gupta, former chairman of the troubled ecommerce firm which faces closure threat.
“It belies every aspect of sanity when they are not interested in the proposed MBO (management buyout),†Gupta said in his first ever public comment after the investor-management fight broke out in July.
The management of AskMe led by Gupta and the investor Malaysia-based Astro Group are engaged in an acrimonious public debate and litigation after the latter stopped funding the company, leading to suspension of operations and default in salary disbursement and credit repayment.
Techcircle.in/VCCircle last week reported that AskMe, incorporated as Getit Infoservices Pvt. Ltd, was likely headed for a wind-up and quoted Astro Overseas spokesperson who said, “As the company will now possibly go through the winding-up process, any potential buyer will only be considered by the liquidator once appointed by the court.â€
Gupta, who was running AskMe Group until mid-August, holds less than 1% stake in the company while Astro, through is subsidiary Astro Entertainment Network Ltd (AENL), holds a 98.5% stake. Astro put in around $300 million in the company in the past six years. With the fund crunch, losses and an existential threat looming over AskMe, which runs internet services including ecommerce, hyperlocal grocery sales and furniture sales, Gupta made repeated attempts for a management buyout.
Gupta, in an email sent to Techcircle.in/VCCircle, came out strongly against Astro’s refusal to accept the management buyout offer. “It is unfortunate that Astro continues to have zero regard for the future of 4,000 Indian employees and continues to be unreasonable in not paying salaries and vendor dues,†he said. He dismissed Astro’s claim as a patient investor. “Patiently witnessing the employees and vendors grappling with their financial woes is not being responsible. What is patience without any responsibility?†Gupta said.
Astro earlier said an independent review had concluded there was little prospect for turnaround as the business was insolvent. Gupta rejected these remarks. “We have already challenged Astro to make this so-called "independent advisor" report public and to release all correspondence since April 30 public, including correspondence on the MBO,†he said.
About Astro’s threat to conduct a forensic audit on the books of AskMe, he said “We have challenged them to appoint a neutral party like KPMG or Deloitte to conduct an audit. It may also be brought to light that all three audit committees set up by Astro in the past on corporate governance had Astro-appointed nominees. The audit committee reports did not find any wrongdoing on the management's part.â€
According to Gupta, more than the business performance, it was the majority shareholder Astro’s background that discouraged potential investors from putting in money in AskMe.
“Their (Astro’s) blotted image, thanks to numerous CBI cases over the Maxis scam, has prevented investors to move beyond the drawing board talks. And when their top bosses got charge-sheeted by CBI, it became all the more difficult to get investor interest piqued,†Gupta said.
He claimed that he has all things – including “their acknowledgement of the MBO and asking for it , their commitments to fund the company till July 31, 2016 and the acknowledgement of their dues and commitment to pay them†– on paper.
Like this report? Sign up for our daily newsletter to get our top reports.