The Invisible: Inside Jabong Story

Jabong has been in the news recently for all the wrong reasons. There was allegations of wrongdoings and conflicts of interest against its top management personnel (calling them founders would be wrong as they had no stake in the Company and were acting as paid employees only) specially Mr.Praveen Sinha and Mr. Heavent Malhotra. It all started with publication of an article by theken.com (now taken off the site as Mr. Sinha has got an stay order from a court in Hajipur, Bihar). After the Ken Article several newspapers including Mint has been busy writing about the conflict of interest and the Gojavas story. The matter at one point of time was trolling on social media and recent one is a tweet by Unicon Baba (@uni_con1 saying that Rocket Internet (parent company and major investor in Jabong) is filing a legal case against Mr. Praveen Sinha and Mr. Heavent Malhotra, sources also said that Amarchand Mangaldas, one of the top law firm in India is representing Rocket Internet. Although we have not been able to substantiate this from the Court, yet it was also reported that Price Waterhouse Cooper (PWC) a Big 4 accounting and Auditing Firm has conducted a Forensic Audit of Jabong on behalf of Rocket Internet.

Between all such happenings what seems to be missing is the role of their Consultant M/s Aristotle Consultancy (www.aristotleconsultancy.com). It is surprising that nobody is aware about the role played by Aristotle in building jabong. This firm was founded by Mr. Kumar Aniket, Mr. Sanjiv Lamba and Mr. Deepak Dhamija with a focus on Virtual CFO Services, a unique kind offering (If one check the web page of Aristotle) under which they provide services like managing finance & accounts, compliances, corporate governance, reporting and strategic requirements .

Mr. Deepak and Mr. Sanjiv are brother-in-law, Mr. Sanjiv and Mr. Aniket has worked together in Oxigen Services, few years back before starting of Aristotle Consultancy.

The independent sources also say that M/s Aristotle Consultancy was involved with Quickdel (Now GOJAVAS) (logistic arm of Jabong) also. In their capacity of Virtual CFO they were looking after finance & accounts, compliances, corporate governance, reporting and strategic requirements affairs of GOJAVAS. Mr. Aniket when asked denied being involved with Quickdel transaction and said that it may have happened after his exit. Despite denial, upon insisting Mr. Aniket confirmed that Mr. Sanjiv was in talks with Mr. Praveen to offer the firm’s Virtual CFO business of Quickdel. Interestingly just after the exit of Mr. Aniket, who was legal and taxation brain of Aristotle, this firm started to lost its edge. Upon asking how Aristotle become so important for Jabong Mr. Aniket says that Aristotle has been introduced to Jabong by Mr. Praveen Sinha through Mr. Deepak Dhamija, who was the batchmate of Mr. Praveen in IIM, Kolkata. He introduced Mr. Aniket, when Mr. Praveen said he is looking for a lawyer with understanding of Startip and E-Com. business and then the jabong’s story unfolded. In his own wordings the Role of Aristotle in Jabong cannot be downplayed.

Mr. Aniket, as being said by the sources, was the legal brain who created all major policies , in fact it is also rumoured that he advised Jabong to hive off logistics business as a separate entity because of FDI related complications. At that time, FDI in Courier and logistics was allowed under approval route only. In fact the GOJAVAS team, handling logistics, was not permissible to do this business under then FDI regulations. During conversation he was on record saying that he has left Aristotle in 2013 to focus on his venture Staava Consultancy and this GOJAVAS thing happened after his exit from Aristotle. He further clarified that he had advised Rocket management (he refused to give names) about hiving off logistics business in to separate legal entity. What he advised was for jabong’s holding company, jade, which was holding 100% equity in proposed venture of Rocket Internet, by directly acquiring 100% stake in the proposed logistics company. In his own wordings “He was informed that this matter will be looked after by one of the big law firm and as he was on the exit mode, he did not pursue the matter”.

From our independent research and meeting with Aniket and few other sources, the inside story says that Aristotle was responsible for all Finance, Corporate Governance & Legal matters of Jabong and their employees were handling everything including transfer of shares, incorporation of companies and also the day to day accounting and legal advisory services. If there was any financial conflict, it is impossible to assume that Aristotle was unaware about it. Sources even say that Aristole was more than an advisor and they were so strong that not a single rupee can goout without their knowledge. Sources even say that they were part and parcel of Jabong, and not a merely adviser during the period Jabong was on rise and when it reaches on top Aristotle became a Unicorn. Some Jabong employees openly praised the professionalism of Aristotle and the way they blazed through legal collocations facing them. One person even quoted the favorite punch line of Mr. Aniket “Law is an accommodating mistress it does whatever you want to do if know how to ask”. Sources also say that Jabong had hired entire Aristotle team for working of its projects including Mr. Suneel Kumar Tomar, who has acting as sort of finance controller of Jabong even continuing as an Aristotle Employee.

Now, what is surprising is that nobody seems to have taken Aristotle factor into account. This Jabong mess have highlighted the dark underbelly of Indian Startups and the shenanigans their advisers do to circumvent Foreign Investments and other complications.