Hoping to avoid closure, Getit offers options to Astro Entertainment

Getit Infoservices Pvt Ltd, which operates e-commerce businesses under the AskMe brand and is on the verge of closure, has in a last-ditch effort written to its Mauritius-based majority shareholder Astro Entertainment Networks Ltd (AENL) offering four options to save the group from sinking.

In the letter to Ralph Marshall of Astro Overseas Ltd, which owns 100 per cent stake in AENL, and Hisham Mokhtar of AENL, the management of Getit Infoservices it has said shuttering of the group would adversely impact its over 4,000 employees, reports dna newspaper.

 "Keeping in mind the best interest of 4,000+ employees of Getit Group and to save the business of Getit Group I would like to place multiple option on table for discussion," wrote the group's top management on 12 August.

It urged the Malaysian investor to not "be in a hurry to close down the business".

"Getit Group is still not commercially insolvent that it cannot attract investors," wrote the management in a bid to keep the foreign investors from shutting down the operations of the marketplace businesses owned by Getit.

Among the revival suggestions put forth are management buyout (MBO), "primary" infusion of fund within 100 days, buying out of Getit Stores Pvt Ltd, which is 100 per cent owned by Getit Info and has stakes in all its marketplace business, or acquisition of all marketplace businesses in which Getit Store has stake – Getit Grocery, Getit Furniture and Getit e-wallet.

The ecommerce start-up, which has a complex corporate structure, has been going downhill over the last few months and is about to fall over the cliff if sufficient funds are not immediately pumped into it.

The MBO deal, which the minority shareholders had proposed, fell through because of disagreement between them and the Malaysian investors.

In their letter, DNA newspaper reported, the Indian stakeholders have taken an accommodative stance; "We can discuss the terms, which as per your letter dated August 10, we fail(ed) to mutually agree and see if a middle path can be achieved, which satisfies the interest of both the parties.''

The second revival package includes "primary infusion of funds" within 100 days on mutually agreed valuation.

"This will give Getit Group required oxygen to survive till we identify a third-party investor, who can provide an exit to AENL," states the letter.

According to the report, the management is looking to raise $100-150 million from prospective investors, who were ready to put in money within next 100 days. The fund could be brought in as equity or debt or a combination of both.

And since it would be injected into companies of Getit Infoservices, it will result in dilution of all the current shareholders.

The amount, he said, would be sufficient to run the operations of the group companies for at least 18 months, by which time the management expects to start generating positive cash flows.

In case both these above proposals were not agreeable to the foreign investors, the Getit management has come up with a third option that involves acquiring of Getit Stores Private Ltd; "I am willing to acquire either as a share acquisition or as a business acquisition the entire business of Getit Stores Private Ltd, provided the valuation is agreed upon".

The fourth revival proposal talks about buying out "shares" or "businesses" of all the marketplaces in which Getit Stores has stakes – Getit E-wallet Private Ltd, Getit Grocery Private Ltd and Getit Furniture Private Ltd – on mutually agreeable valuation.

On Friday, there was a strong buzz in the market that the operations of the Gurgaon-based internet search platform had been closed down and its employees laid off due to shortage of funds and a sudden exit of its majority overseas investors.

A week back, the key management personnel  had written to the ministry of corporate affairs  and Registrar of Company to ensure that the principal investors of Getit Infoservices – AENL – did not exit the country without meeting their liabilities.

AskMe began its operations in 2010 as a classified portal and launched its marketplace AskMeBazaar in 2012. A year later, Getit Infoservices acquired it from Network18. Since then, it has launched many other marketplaces like AskMeGrocery, AskMeFin, MebelKart.com and others.

Over the last six years, Astro has invested around $300 million in various businesses of Getit under the AskMe brand.

A statement issued by AENL on Friday said that despite its huge investment, Getit had not been able to make its business profitable and sustainable.

The Malaysian investor said an independent review by advisors had concluded that there was little prospect for turnaround and the business is insolvent.

"AENL intends to appoint a forensic auditor to review Getit's books and will take appropriate steps based on the results of that audit," it said in its release.

The majority shareholder said it had been a "responsible and patient investor in Getit over the last six years making every effort possible to support the business even as other investors withdrew".

"AENL has at all times been fair, scrupulous and professional in its dealings with the management of Getit. AENL will continue to act responsibly and in accordance with Indian laws over this matter," it said.

Similarly, another statement was issued by the Getit management that accused its Malaysian investor of "trying to flee the country without paying the employees and vendors of AskMe and other companies and statutory authorities".

They further alleged that the employees were intimidated and threatened when they resisted aiding them in their "illegal acts". This, they said, has led to many resignations in the group.