Two days after Morgan Stanley said Walmart may exit Flipkart, the Indian e-commerce giant’s chief executive assured employees that Walmart remained committed to India and confident of Flipkart's growth story.

Kalyan Krishnamurthy, in an internal communication to Flipkart employees, said, “Walmart remains extremely confident in the potential of the Indian market and Flipkart's ability to lead the e-commerce space. By partnering with Flipkart, Walmart has taken a long term view of the opportunities and hence is unfazed with any short term hurdles."

Krishnamurthy denied the reports that claimed Walmart is looking to exit from the e-commerce firm. The US retail giant had bought 77 percent stake in Flipkart for $16 billion last May.

"Morgan Stanley report is based on certain assumption gathered from public sources. It talks about how Flipkart does business, what drives its growth, regulatory environment in India, draws comparison with events that occurred elsewhere in the world to another company. In reality, the report couldn't be further than the truth."

Morgan Stanley, in a report dated February 4, said that “an exit (by Walmart) is likely, and not completely out of the question, with the Indian e-commerce market becoming more complicated”.

The brokerage added that owing to the new regulations, Flipkart's losses may rise 20 percent-25 percent, which may potentially have a bearing on Walmart's results in the upcoming quarters.

The report comes in the wake of the new Foreign Direct Investment (FDI) rules for the India’s ecommerce sector which were implemented by the government on February 1.

Online giants Flipkart and Amazon had raised objections with respect to certain clauses in the circular and had sought an extension of the February 1 deadline. Three key issues - equity participation in the entity, seller relates issues and exclusive deals were flagged by the e-commerce players.

First Published:Feb 6, 2019 10:55 AM IST