BackAmazon: A case of mistaken identity
The confusion started last week when media reports, citing unidentified people, suggested that Amazon’s local units shelled out a whopping ₹8,546 crore ($1.2 billion) in legal expenses to maintain a presence in the country
PremiumAmazon.com Inc.’s India unit has been a victim of mistaken identity, drawing unflattering attention to its business and forcing the e-commerce giant to clarify that the similarly named ‘Amazon India Ltd’ is not related to it in any manner.
The confusion started last week when media reports, citing unidentified people, suggested that Amazon’s local units shelled out a whopping ₹8,546 crore ($1.2 billion) in legal expenses to maintain a presence in the country.
Among the subsidiaries listed in the reports was ‘Amazon India Ltd’, whose legal expenses highlighted for fiscal years 2018-20 stood at ₹4,565 crore. But a closer look reveals that the company shares the same name but has no connection with Amazon, the online retailer.
Rather, Amazon India counts Delhi-based real estate developers Parsvnath Developers and Aadharshilla Contractors as key shareholders and owners.
In a letter to commerce minister Piyush Goyal on 28 September, Amazon highlighted and clarified this mistake by the media.
“Several of the articles also incorrectly suggest that an entity called ’Amazon India Limited’ is an Amazon subsidiary and have improperly attributed its legal expenses to Amazon. Amazon India Limited is neither an Amazon subsidiary nor connected with Amazon in any way. Its legal expenses, therefore, are unrelated to Amazon," read the letter by Amazon Seller Services Pvt. Ltd.
Two of Amazon’s largest Indian units—Amazon Seller Services Pvt. Ltd and Amazon Retail India Pvt. Ltd—cumulatively reported ₹2,176 crore in ‘legal professional expense’ for the year ended 31 March 2020, according to their filings with the ministry of corporate affairs that Mint has reviewed.
This is a 44% increase from FY19, when overall legal professional expenses of Amazon stood at ₹1,512 crore for the entities mentioned above. Amazon claims that the line item in its financial statements includes non-legal expenses as well.
“Last week, some media outlets began reporting that Amazon’s India operations spent a combined ₹8,546 crore in legal fees during 2019 and 2020. We immediately issued a statement, clarifying that the quoted amount was inaccurate and appears to stem from a misunderstanding of those same filings, in particular, a ‘legal professional expense’ line item that includes substantial non-legal expenses," read Amazon’s letter to Goyal earlier this week.
“In our statement, we disclosed that the actual legal fee expenses for the fiscal year ended March 2020 were approximately ₹52 crore, a fraction of the amount alleged in the media," Amazon added.
According to Amazon, the non-legal expenses under the line item include other professional services such as outsourcing, tax consultants, customer research and logistics support.
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