Employees of the Indian e-commerce companies Myntra and Flipkart will get a cash payment of almost $700 million. The reimbursement is intended to make up for the loss in share value that resulted from the split of Flipkart’s subsidiary for digital payments, PhonePe, for qualified current and past workers.
Walmart, which purchased a controlling share in the online retailer in 2018 and is anticipated to close soon, will assist the payoff. According to people with knowledge of the situation, CNBC TV-18 claimed that the company’s Human Resources department has written letters to qualified workers of Flipkart and Myntra.
While Flipkart has a workforce of over 15,000 employees, Myntra has a workforce of around 2,500-3,500 employees. The cash payout will likely be the last buyback programme by Flipkart ahead of it much-anticipated initial public offering (IPO) in 2023.
In 2016, PhonePe was purchased by Flipkart for $20 million. Up until December of last year, when both companies declared a complete split of ownership, PhonePe operated as a subsidiary of Flipkart. Walmart still serves as the parent business for both Flipkart and PhonePe despite the ownership split. The largest shareholder in both businesses will continue to be Walmart.
In a joint statement, Flipkart and PhonePe said: “As part of this transaction, current shareholders of Flipkart Singapore and PhonePe Singapore, led by Walmart, have bought shares in PhonePe India directly. This completes the transition that began earlier this year to transform PhonePe into a totally India-based business. The primary stakeholder in both business units will continue to be Walmart.
Flipkart CEO Kalyan Krishnamurthy said that despite its separation from Flipkart, PhonePe will continue to scale and achieve its vision of providing financial inclusion to Indians.