Flipkart (Photo: Bloomberg)
Walmart-owned Flipkart on Thursday said the company is in compliance with Indian laws, including FDI regulations, and will cooperate with the Enforcement Directorate on the notice sent to the e-commerce major.
The Enforcement Directorate (ED) has issued a show cause notice of Rs 10,600 crore to Flipkart and its promoters for alleged violation of the foreign exchange law, official sources said on Thursday.
When contacted, Flipkart said it is in compliance with Indian laws and regulations, including FDI regulations.
"We will cooperate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice," Flipkart added.
Comments could not be immediately elicited from the founders.
According to sources, the notice under various sections of the Foreign Exchange Management Act (FEMA) was issued to a total of 10 noticees last month that includes Flipkart, its founders Sachin Bansal and Binny Bansal among others.
The notice was issued after completion of investigation and the charges include violation of foreign direct investment (FDI) rules and those that regulate multi-brand retail, they added.
The case of alleged FDI rules violation against Flipkart has been under the ED scanner since 2012, and the agency, as per official sources, has found alleged violations of FEMA under various counts including an instance of transfer and issue of security to a person/entity outside India.
Notably, the US-based retail giant Walmart Inc had picked 77 per cent stake in Flipkart for USD 16 billion in 2018. Its founders and many of its investors had taken a partial or complete exit at that time. Sachin Bansal had exited from Flipkart, selling his about 5.5 per cent stake.
Last month, Flipkart Group had announced raising USD 3.6 billion (about Rs 26,805.6 crore) in funding led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, valuing the e-commerce giant at USD 37.6 billion.
With this deal, SoftBank re-entered Flipkart's cap table. SoftBank had sold its approximately 20 per cent share when Walmart bought a stake in Flipkart.
Flipkart, which competes with companies including Amazon and Reliance JioMart in the Indian e-commerce space, has seen significant growth over the past many years.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.