Home >companies >Flipkart, Snapdeal look to beef up boards with high-profile members

Bangalore: India’s top e-commerce firms Flipkart and Snapdeal are looking to strengthen their boards of director with corporate executives who can help steer the fast-growing companies as the stakes get higher in the scramble for market dominance.

Jasper Infotech Pvt. Ltd, which runs Snapdeal.com, has hired Bharti Enterprises Pvt. Ltd vice-chairman Akhil Gupta as an independent director, documents filed with the ministry of corporate affairs show.

Gupta, a two-decade veteran at Bharti Airtel, is one of the executives who helped build the company from scratch, and is a confidant of Bharti Enterprises chairman Sunil Mittal. Gupta is also known to be a savvy deal-maker—he helped Bharti raise hundreds of millions of dollars in capital when it was a private company, and then played a key role in taking the company public.

Snapdeal and Gupta confirmed he had joined Snapdeal’s board.

Snapdeal’s bigger rival Flipkart is also looking to hire independent board members, a person with direct knowledge of the matter said.

Gupta’s appointment as Snapdeal director is the highest-profile board hire by an e-commerce company. Until now, the boards of e-commerce firms including Flipkart and Snapdeal have been filled with their founders and private equity backers, partly because these companies were too small to be attractive to, or even need top corporate executives. In addition, corporate professionals looked at the young e-commerce business with scepticism for several years.

Now, however, it’s become clear that e-commerce is here to stay. And India’s largest e-commerce firm Flipkart, which raised $1 billion (around 6,000 crore) about a month ago in one of the highest-ever financing rounds globally by a start-up, and Snapdeal are attracting huge amounts of capital. They are also involved in a bruising battle with the Indian unit of the world’s largest online retailer Amazon.com Inc., which launched here in June 2013.

All of this means that these companies need to add experienced corporate professionals on their respective boards to guide them as they manage billions in sales and tens of thousands of employees over the next few years, experts said. “When you’re investing billions, you want a strong board overseeing the young management teams that these firms have. This will give more comfort to their investors and the investors’ limited partners," said Harminder Sahni, managing director at Wazir Advisors, a retail and consumer products consultancy. “Also, if you have well-known corporate executives on the board, it becomes easier to attract top talent in your management team."

He added that companies need to show they’ve had a strong board for at least a few years before they go public.

“Whenever Snapdeal and Flipkart decide to go public, they can’t cobble up a board six months before that. They need to show they’ve had good directors years in advance," Sahni said.

To comply with India’s rules on foreign direct investment (FDI), Flipkart has registered several entities including Flipkart India Pvt. Ltd, Flipkart Internet Pvt. Ltd and the Singapore-registered holding company Flipkart Pvt. Ltd. India bans FDI in direct online retail but allows foreign investment in marketplaces, where shoppers buy products from third-party merchants listed on a particular site.

Flipkart is planning to add directors at the group level, the person cited earlier said. Its only independent director currently is Rajesh Magow, a senior executive at online ticketing firm MakeMyTrip Ltd.

The company is looking for board members who have experience in expanding businesses, including the ones that Flipkart is present in and is planning to enter, said the person mentioned above. Flipkart is also considering candidates who can advise on the company’s strategy, the person said. “We are looking to add more directors and we’ve had conversations with some people though nothing is finalized yet. It’s not easy to find people of the calibre that we want," the person said.

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