Amazon and NR Narayana Murthy's Catamaran to end their joint venture next year
E-commerce major Amazon and NR Narayana Murthy's Catamaran on Monday said they will not continue their joint venture - Prione Business Services - beyond May 2022.
The announcement came on a day when the Supreme Court ruled that Amazon and rival Flipkart will have to face a probe by the Competition Commission of India into allegations of violations of the competition laws.
Prione Business Services - the joint venture between Amazon and Catamaran - was formed in 2014 and is coming up for renewal on May 19, 2022.
"The two partners today announced they have mutually decided to not continue their joint venture beyond the end of its current term," a joint statement said on Monday.
The JV has enabled over three lakh sellers and entrepreneurs to go online, and helped 4 million merchants with digital payment capabilities, it added.
Amazon and Catamaran, however, did not disclose the reason behind the decision. The companies also did not comment on the fate of Cloudtail India - a wholly-owned subsidiary of Prione Business Services and one of the biggest sellers on Amazon.in.
Prione did not comment on a detailed questionnaire seeking a response on the future of Cloudtail's operations in India and its impact on employees.
Cloudtail India had clocked a 27.6 per cent rise in revenue to Rs 11,412.75 crore in FY20 from Rs 8,944.71 crore in FY19, as per regulatory documents. Its net profit more than doubled to Rs 67.54 crore in FY20 as against Rs 29.38 crore in FY19, according to the documents.
Amazon and Catamaran have announced the decision to part ways at a time when there is a greater scrutiny on the operations of e-commerce marketplaces in India that have foreign investments.
In 2020, fair trade regulator CCI ordered a probe against Amazon and Walmart-owned Flipkart for alleged malpractices, including deep discounting and tie-ups with preferred sellers on their platforms.
Trader bodies like CAIT have also contended that such practices by these companies have severely impacted the business of offline retailers.
Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal on Monday said it is unlikely that the Amazon-Catamaran JV is being ended as part of a strategy to avoid an investigation that may take place when Amazon is probed.
Certain questions are bound to arise for Cloudtail that will have to be answered when CCI investigates Amazon's business module, he added.
CAIT had previously written to Commerce Minister Piyush Goyal to conduct an investigation into the role of Cloudtail India.
In 2018, the government had introduced stricter norms for e-commerce marketplaces with foreign investments.
Following this, Prione Business Services was restructured. While the companies did not divulge details, sources had said Amazon's holding came down from 49 per cent to 24 per cent stake post the restructuring.
In the joint statement on Monday, Catamaran President MD Ranganath said: "As our JV with Amazon reaches the end of its tenure, I reflect on this successful partnership that introduced the power of digitisation and empowered hundreds of thousands of SMBs across big and small towns. We would like to thank Amazon for the partnership that leaves behind a strong legacy of shaping e-commerce in India".
Amit Agarwal, Global Senior VP and Country Head - Amazon India, said the companies had entered into a JV in the early days of e-commerce in India with a shared vision of transforming hundreds of thousands of small businesses in a fast-changing digital world by providing online capabilities, enabling them to access customers both in India and globally.
"We are humbled by how the JV exceeded its vision, helping online commerce evolve through the unrelenting efforts of hundreds of its employees, positively impacting over 4.3 million small businesses, creating hundreds of thousands of jobs, and contributing to India's digital economy," he added.