BUSINESS

Snapdeal-Backed GoJavas Suspends Operations: Report

Cites technical issues

08/08/2016 10:59 AM IST | Updated 08/08/2016 1:01 PM IST
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Snapdeal-backed logistics provider GoJavas, which serves e-commerce companies including online fashion portal Jabong, recently acquired by rival Flipkart, has suspended services because of technical issues and operational changes, the Mint reported.

According to the report, GoJavas, which serves over 450 companies, hasn't served any of its customers for the past five to seven days and it is unclear when it will resume operations. Jabong is the largest customer of GoJavas, which handles nearly 70 per cent of the logistics for the online fashion portal, HuffPost India reported earlier.

Gojavas has said it is "making changes to its operational model to be more flexible and to provide additional services and extra reach," adding an IT issue had affected its plans.

Snapdeal declined to comment on the matter.

Snapdeal owns a 42 per cent stake in Gojavas and has recently attempted to buyout the remaining Gojavas but the deal has not materialised because of differences over valuation, according to media reports. It invested Rs 117 crores in GoJavas late last year, which followed a 2015 investment of $20 million in the company.

GoJavas was spun out of Jabong in 2013. Earlier this year, GoJavas and Jabong, which has recently been bought by Flipkart, became part of an internal governance investigation commissioned by Jabong's previous financial backers, Rocket Internet, following a string of questionable operational deals carried out by certain former Jabong promoters including its spin-off from Jabong in 2013.

Earlier this year, Vijay Ghadge, former chief operating officer of Gajavas, also left the firm and is currently the COO of Snapdeal's logistics unit Vulcan Express.

Snapdeal's stake in GoJavas, does create a potential for conflict of interest as GoJavas now ultimately serves rival Flipkart. Following the $70 million acquisition of Jabong by rival Flipkart, Snapdeal's CEO Kunal Bahl said the latter didn't meet the governance and compliance standards.

ALSO READ: After All That Snapdeal Says Jabong Did Not Clear Compliance Bar

ALSO READ: Sold: Flipkart's Myntra Has Bought Jabong To Massively Pump Up Its Fashion Wardrobe

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