Walmart is likely to lay off a substantial number of employees of Flipkart subsidiary Jabong, which it proposes to merge with its sister group Myntra, media reports say.
Up to 50 percent of the staff of Jabong that employs about 600 people mostly in its Gurgaon facility could face the axe.
With ripples of Flipkart group chief executive Binny Bansal's exit over allegations of misconduct continuing to spread, Walmart had announced the merger of Jabong and Myntra that have been functioning independently under Flipkart.
Jabong site would continue to run, diverting its traffic to Myntra once the merger is complete, some sources indicate.
Jabong, which Myntra acquired for $70 million in 2016 in an attempt to pre-empt competitive takeover, has been struggling to grow its sales. But it enjoyed considerable autonomy from Myntra and Flipkart.
A series of resignations of senior executives has rocked Myntra and Jabong this year. Myntra chief marketing officer and head of Jabong Gunjan Soni and Myntra's chief strategy officer and head of categories Ananya Tripathi resigned earlier this year.
There is speculation that Myntra-Jabong CEO Ananth Narayanan is also on the way out. Other reports suggest that Myntra-Jabong's chief financial officer Dipanjan Roy has also stepped down.
Though Walmart moved in to consolidate its online retail business only now, it was expected to act sooner than later since its $16-billion takeover of Flipkart in May. The global conglomerate seems to have seized the occasion of Bansal's exit to churn up matters in the group.
Myntra and Jabong are both into online fashion retail and the merger will remove the market overlap. Sources in the industry say Myntra, a Flipkart acquisition of 2014, may be required to work more closely with Flipkart's own on online apparel business.
Flipkart CEO Kalyan Krishnamurthy, in a statement sent to some media houses on Thursday, reiterated the importance of ensuring that Myntra continued to operate as an independent platform.
"The Flipkart group is committed to the success of Myntra and growing the business, now more than ever. The Myntra team has been doing innovative work to grow the company and create India's leading online platforms for fashion and lifestyle. We want to empower the Myntra team to continue to operate independently to achieve even greater success," Krishnamurthy said in the statement.
As part of the proposed restructuring, Jabong's operations including technology, corporate functions, and finance would be combined with those of Myntra, sources said. There is speculation that the depleted Jabong office could move to Bengaluru from Gurgaon to share Myntra's premises.
