Thursday, 17 October 2013

Flipkart founders, Sachin Bansal and Binny Bansal, get million dollar paychecks

Flipkart founders, Sachin Bansal and Binny Bansal, get million dollar paychecks

BANGALORE: It pays to be an entrepreneur — India's e-commerce poster boys are flaunting their million-dollar paychecks in less than six years after starting Flipkart. IITiansSachin Bansal and Binny Bansal took home a handsome remuneration of Rs 10.25 crore ($1.7 million at current forex rates) each in the six months between September 2011 and March 2012, showed the latest filing with the corporate affairs ministry. 

The filings closely followed arestructuring of the Flipkart ownership, which now rests with a Singapore-based holding company after the FY12 rejig . The jaw-dropping numbers even eclipse their American e-commerce peers, and is possibly a testimony to investor faith in the burgeoning domestic e-commerce story . Consider this: Darrell Cavens , co-founder and CEO of US-based Zulily, a shopping portal for moms, which recently filed for a $100-million IPO, took home $290,000 (Rs 1.74 crore) in the last calendar year, including bonus payout. 

A detailed break-up of the remuneration of the two Flipkart founders wasn't available. A company spokesperson said that the Bansals get a base salary of Rs 50 lakh each per annum, while the other components include bonuses and possibly returns from share sales. "It's proof that entrepreneurship in India, if done right, can be extremely rewarding," said Sachin Bansal, CEO of the country's largest e-commerce company, Flipkart. 

The website, which sells a host of items from books to mobiles phones to stationery and perfumes, has raised $540 million since 2007 from leading investors, including South African media giant Naspers, Tiger Global, Accel Partners, Dragoneer, Morgan Stanley, Sofina and Vulcan Capital. The latest $360-million fundraise , which closed last week, valued the Bangalore-based company at $1.5 billion (over Rs 9,200 crore). 

The Flipkart founders are said to have vested some of their shares in the last two rounds of fund-raise in the past 18 months, which is possibly swelling their remuneration. The Bansals, along with senior management , reportedly control about 25% of Flipkart, pegging their net worth at around $375 million (Rs 2,250 crore) at current valuation. 

Flipkart is reporting an annualized gross merchandise sale (or total value of transaction ) of about $600 million (over Rs 3,680 crore). It plans to take the annual gross sales to $1 billion (over Rs 6,100 crore) in the next 12 months before starting work on an overseas listing. Notwithstanding the challenges, India's e-commerce market is expected to touch $8.8 billion (over Rs 54,000 crore) in 2016, says research firm Forrester. 

The Bansals' bulge-bracket salary is a big boost to the bleeding e-commerce industry that is coming under the scanner for not having sound business fundamentals. "This could be a one-off , considering that they've exercised their vesting options. It's rare, but it may also be a case of investor belief that exit is some time away and founder management must be well compensated ," said Mukund Mohan, CEO-in-residence , Microsoft Accelerator.
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