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Askme faced a Unexpected Shutdown with a Fund Crash

Askme-faced-an-Unexpected-Shutdown-with-a-Fund-CrashThe Gurgaon-based consumer Internet platform AskMe was shut down recently. The company abruptly stopped its operations and has laid off its remaining staff. According to the people among the development staff, a severe cash crunch made them take this step. This happened because of the unplanned exit of its principle investor- Astro Holdings. AskMe has also asked the Ministry of Corporate Affairs and the Registrar of Companies to make sure that Astro does not exit the country without meeting its liabilities and commitments.

Due to this unexpected and unplanned exit of Astro, Askme faced a major setback in terms of finances. About 650 employees lying in the annual salary bracket of INR 2.5 lakh to INR 6 lakh resigned from AskMe. According to the filings with the Ministry, Astro has provided funds up to $119 Mn (INR 800 Cr) to the company. AskMe have also been in discussions with Alibaba and Baidu raising $200 Mn this fiscal at $1 Bn valuations, to further revamp its business- The AskMeBazaar.

Major Breakdown

Things got worse when its major investor, Helion Ventures also held back their interest to fund AskMe. This shutdown has left more than 4000 employees, market vendors as well as other creditors in a state of panic. In the conversation to Astro, it was also revealed that it replaced its foreign directors with “on hire” CA firms from India. This sudden decision is considered as illegal.  Astro is already facing the heat of account of the 2G scam. Astro has also been previously charging sheeted by Aircel Maxis in the CBI for cheating and fraud. This made Astro exit Indonesia for the same.

AskMe.com was launched in the year 2010 in the classifieds portal. Further, in the year 2012, it came out with Askmebazaar.com as an online shopping portal that focused on small and medium businesses (SMEs). Later in the year 2013, Getit acquired AskMe from Network18.

Before its downfall, the portal was operating with over 120K merchants and in over 70 cities including metros and even Tier II cities. The portal was also diversified into hyperlocal space with Askmebazaar’s next day delivery capability. The company have also investments in online furniture marketplace Mebelkart, in August 2015 and also have acquired grocery marketplace-BestAtLowest.com.

The Bottom Line

For this case, Astro Astro Entertainment Networks Ltd (AENL)  shared statements that it has since the past six years made huge investments in Getit InfoServices Pvt Ltd. AENL has made up to USD300 million to date, keeping the business afloat during volatile market conditions. Unfortunately, Getit has not been able to make its business sustainable and profitable despite these huge investments by AENL. A recent review by advisors has also concluded that the business is insolvent with a little prospect of the turnaround.

Contrary to the recent media reports, Astro has always been a responsible and patient investor. Astro served Getit for the last six years making every possible effort to support the business.

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