AskMe Shuts Down Due to Non-Payment by Investor Astro Group; Lays off all Employees Without Any Remuneration
AskMe, a hyperlocal e-commerce company, has been facing troubles since the start of the year when its primary investor, Malaysia-based Astro Holdings defaulted on payments to sellers, own employees and other dues. The bills had amounted up to $15 Million from January 2016, and since Astro has 98.5% stake in AskMe, the company had to rely on just one source of income.
AskMe Group CMO, Manav Sethi talked about a possible buyout, “Astro is pulling out of all business and its investments in India because of the political and legal issues. AskMe Group has made a management buyout bid and leadership team is working towards taking over the company.” However, this failed to see the light of the day because of Astro.
Making the problems worse, Astro was supposed to sign the Management Buyout Proposal(MBO) but eventually refused to exit the business or infuse more capital into the company. This locked AskMe from all sides since it could not raise money from any other investor to clear off the dues and continue the business. The employees haven’t been paid for the past two months which have made matters out of hand.
Because of all these matters piling up, finally AskMe Group has decided to suspend its operations across India with immediate effect. The daily running costs and legal hassles were taking a toll of the company and this was probably the best and the only decision the higher management could have taken.
Interestingly though, the site is still live and customers can still place order – however, we doubt that any of the orders placed now will get fulfilled.
Will AskMe be able make it back on its own?
While the company has shut its operations everywhere, there is a little ray of hope that the operations might be back soon. After all, the only reason AskMe couldn’t deliver is because it is stuck in a tussle with Astro Holdings, which itself is stuck with legal matters related to money laundering.
Astro Group also continues to refuse to attend board meetings and other important discussions for AskMe’s future. Around 650 employees had exited from AskMe early this year due to fear of terminations from the workforce and AskMe’s inability to pay salaries.
The future does look bleak for the company, but it is also an important lessons for startups that rely on just one majority investor. In fact, it is not just about investors, a company must have a vision for the future that provides it a safe belt for the years to come.
Even if AskMe makes it back, it might not find enough investors and adequate funding to restart its operations, because the industries it has forayed into – groceries and furniture – are already facing operational and financial challenges.