In the 1980s, India’s fiercest corporate battle was fought between Reliance Industries’ late Dhirubhai Ambani and Bombay Dyeing’s Nusli Wadia over polyester. While Wadia was the scion of a 130-year-old empire, Ambani was nouveau riche – with barely 10 years spent in the rich men’s club.
Ambani’s Reliance raced ahead to become 15 times bigger than Bombay Dyeing, but Wadia – content to cling on to his silver spoon – still looked down on the new crorepati with disdain. The years that followed saw the two indulging in a clash of political connections, bureaucratic might and financial strength, a contest in which Ambani emerged victorious.
Today, decades later, the country can’t help but get that strange feeling of déjà-vu as two feisty entrepreneurs in the field of e-commerce – Flipkart co-founder Sachin Bansal and Snapdeal co-founder Kunal Bahl – lock horns in an insane race to the top.
On Friday, Bansal took a dig at Bahl on Twitter.
Alibaba deciding to start operations directly shows how badly their Indian investments have done so far— Sachin Bansal (@_sachinbansal) March 25, 2016
Alibaba is China’s e-commerce behemoth, which has investments in Snapdeal.
Didn't Morgan Stanley just flush 5bn worth market cap in Flipkart down the 🚽? Focus on ur business not commentary :) https://t.co/8NpkhWWo2j— Kunal Bahl (@1kunalbahl) March 25, 2016
The battle so far has primarily been about gross merchandise value (GMV), which is the total value of goods sold without calculating promotions and discounts, and valuation. There was also a war of discounts, with the e-commerce companies even selling goods at 70-80% discounts on occasion.
However, there’s nothing new about their Twitter wars.
In the middle of 2015, Bahl had fired the first salvo at Flipkart when he told a newspaper about a company “whose valuation is ridiculously high, and there are a bunch of investors there who have already put in a lot of money”. Flipkart had just raised $1 billion back then.
To this, Bansal shot back a gem of his own: “Don’t blame India for your failure to hire great engineers. They join for culture and challenge.”
Things started changing by February-end, when Morgan Stanley – a minority shareholder in Flipkart – brought down the valuation of its stake by 27% and placed the e-commerce poster boy at $11 billion (Bahl’s latest tweet referred to this development).
So, what does the rest of the market think of their spat? An executive with Shopclues, another e-commerce major, told HT over the phone that she finds it amusing. Others think it does not befit a market this evolved. “It is no more a start-up game,” said Vijay Shekhar Sharma, CEO and co-founder of Paytm. “The business is now more about scalable and sustainable performance.”
Unverified reports held that though Alibaba had wanted to invest in Flipkart, it backed out over valuation issues. The last offer from the company stood at $8 billion, which was even lesser than what Morgan Stanley valued Flipkart at.
In an email response, a Flipkart executive said: “This information is false and baseless. We are well-capitalised for the long term and we are not looking to raise funds. We believe in raising funds when they are available, and always at the right valuation.”
A financial daily also reported around that time about Amazon discussing a buyout with Flipkart. However, Flipkart denied that too.
The Twitter spat is nowhere close to the war that Ambani and Wadia waged with each other, but Bansal and Bahl have both started feeling the heat from investors. In its last round of fund-raising, Snapdeal was valued at $6.5 billion – lesser than its GMV of $7 billion. That’s unusual.