Binny Bansal has resigned as CEO of Flipkart Group, effective immediately, owner Walmart said in a statement on Tuesday.
His resignation "follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct," according to the company blog post, which didn't describe the claims against him. "He strongly denies the allegation."
The company had already been developing a succession plan because Bansal was preparing to step down. That process has now been accelerated, Walmart also said.
Walmart in August ponied up $16 billion for a 77% ownership stake in Flipkart, an effort widely seen as taking on Amazon in a country with a growing middle class and an affinity for e-commerce. That was already seen as a risky move, however, because of the steep price and the many challenges in India when it comes to logistical and regulatory hurdles.
"[T]he price of entry seemed high, the deal was accompanied by material earnings dilution, the company has had mixed (at best) international results that have included operational and regulatory challenges, and India seems to be a more difficult market in which to operate," Wells Fargo analysts led by senior analyst Edward Kelly wrote in a note emailed to Retail Dive on Tuesday. "Today's news is a clear disappointment, as strong local management was one of the key factors offsetting these concerns."
Walmart didn't go into specifics on Tuesday, but the company did say that the way Bansal handled the claims against him was enough to oust him. The controversy "risked becoming a distraction and Binny has made a decision to step down."
"While the investigation did not find evidence to corroborate the complainant's assertions against Binny, it did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation," the company also said. "Because of this, we have accepted his decision to resign."
Although Flipkart Group is without its chief and remaining co-founder for the time being, its units are carrying on as before. Kalyan Krishnamurthy will continue to be CEO of Flipkart itself, Ananth Narayanan will continue as CEO of fashion sites Myntra and Jabong, and Sameer Nigam will continue leading PhonePe as CEO, Walmart said. Both Krishnamurthy and Nigam will report directly to the board. In September, four senior Walmart executives reportedly went to Flipkart as the latter integrated with its new parent.