Troubled e-commerce logistics company GoJavas is in talks with a Delhi-based inter-city courier service operator for a buy-out, said two people privy to the development. GoJavas had suspended its operations on August 2 and is learnt to have told its employees that it will resume operations by August 17, most likely under a new management.
The two people mentioned above said that GoJavas is at an advanced stage of talks with Delhi-based Pigeon Express Pvt Ltd, and the deal is likely to be closed soon. Praveen Sinha, the individual leading the management of GoJavas currently and the largest independent shareholder in the company, and Pigeon Express’ director Anand Rai did not respond to email queries sent by Techcircle.
Founded in 2004, Pigeon Express is a logistics service provider with 135 delivery centres across India and works with the country’s leading e-commerce companies.
GoJavas was in the eye of a storm recently after allegations of financial irregularities from the time when it was part of online fashion retailer Jabong, emerged. The allegations were targeted at Sinha, who as a co-founder and managing director of Jabong was at the helm while GoJavas was the in-house logistics service provider for the online fashion retailer.
GoJavas was originally launched by Abhijeet Singh, Ashish Chaudhary and Randhir Singh Chaudhary under QucikDel Logistics Pvt Ltd. Later, Abhijeet, reportedly, transferred his 50% stake in the company to Sinha, who, then, became the largest shareholder in the logistics company.
In 2013, GoJava was spun off from Jabong as an independent third-party logistics firm. The allegations of fraudulent transactions between Jabong and GoJavas pertain to this period.
Sinha, meanwhile, denied any wrongdoing and also threatened legal action against the owner of a Twitter handle, who, purportedly, spread the news of an inquiry set up by Jabong’s primary investor Germany-based Rocket Internet into Sinha’s role in the alleged financial irregularities in the dealings between GoJavas and Jabong.
In 2015, Sinha, along with few more promoters, sold 42% stake in GoJavas to e-commerce company Snapdeal over two rounds.
GoJavas, however, couldn’t scale up the business. Snapdeal, meanwhile, set up its own logistics unit called Vulcan Express even as it continued to remain invested in the company. Last month, reports emerged that GoJavas was in talks with Snapdeal for a buy-out but the deal fell through on account of differences between the two companies over valuation.
Post the fall-out, Snapdeal pulled out its business from GoJavas and started relying on Vulcan Express. It also poached key personnel from GoJavas, thus, destabilizing the company a bit. This coincided with Jabong ending up in the hands of country’s largest e-commerce company Flipkart, which, already has its own logistics firm.
With two of its big clients, Snapdeal and Jabong, gone, and some top-level exits along with the allegations of fraud, GoJavas fell off track and was soon facing a closure. In this scenario, the sale to Pigeon seems like a distress call and is not likely to fetch any handsome returns to its promoters and investors, including Snapdeal. The latter, reportedly, invested around $39 million (close to Rs 250 crore) in the company.
The fall-out of these quick developments, and the departure of senior executives such as chief financial officer Ritu Madan, who quit barely three months after joining the company, was that GoJavas suspended its operations earlier this month.
GoJavas, however, blamed the suspension of business on some IT-related backend hitches and said in a statement that it was getting ready to roll out a new operational model even as it told its employees that the company will be back in business by August 17.
The people mentioned above said that the deal between GoJavas and Pigeon is about to be closed and an announcement to the effect will be made over the next few days.
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