Sustainability of Loss Making Online Companies

How do you swallow this: Flipkart which was established in year 2007 has never earned profit till date. It has accumulated losses in hundreds of crores till now (e.g. it reported Rs 281 Crores in losses in FY 2013). But this year Flipkart founders Sachin and Binny Bansal have become India's 86th richest persons with wealth of $1.3 Billion each.

Compare this case with Kingfisher and Vijay Mallya. The company was making losses while Vijay Mallya was India's 84th richest man till year 2013. Perhaps not many would have raised brow even at him if he kept finding investors to keep his loss making company running. But ultimately his company went bankrupt and he also came out of India's 100 richest persons list. It was not only a personal loss for him but it meant disaster for thousands of his employees.

Can the story repeat itself with Flipkart? Most likely no - but it is only a guess. Flipkart has some 33,000 employees. What if the company fails? It would surely be tough for its employees and their family members. Same case with so many other online retail companies.

My point or concern is simple: what are our regulators doing about it? Is not some government regulator meant to keep track of such risky businesses - losses for 8 years straight with owners rising high on the Billionaires list? Of course I am not saying ban them; but owners should be held more responsible by regulators if their employees count goes > a threshold.

I think there is a strong case to bring out some sort of mechanism to protect workers and other stakeholders in case of such companies.

- Rahul

[Disclaimer: Views expressed are personal]