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Why does Jamuna Group think Evaly is a good investment?

  • Published at 09:08 pm July 28th, 2021
Company logos of Evaly and Jamuna Group Collected

In an inspection report submitted to the Ministry of Commerce last month, the central bank said that Evaly's total liabilities were worth Tk407.18 crore, but it had only Tk65.17 crore in assets

Jamuna Group is about to invest Tk1,000 crore, with an initial investment of Tk200 crore, in Evaly — the digital marketplace which has been mired in allegations of malpractice and is under investigation by several agencies.

Asked about why Jamuna Group has decided to invest into a controversial platform, Group Director Monika Islam told Dhaka Tribune: “Basically, our analysis prior to the investment found that there has been issues with fund management. The subsidization of products for market access and its mismanagement was the issue and they only needed an investor.

“In terms of the business model, every e-commerce platform has to abide by the SOP that has been introduced by the Commerce Ministry. We have faith that Evaly has honest business intentions to materialize the Digital Bangladesh vision and take the country's e-commerce sector forward. E-commerce is the future and investing in the local e-commerce sector and its consumers is our goal,” she added. 

Also Read - Evaly announces 1,000C cash infusion from Jamuna Group

Previously, in an inspection report submitted to the Ministry of Commerce last month, the central bank said that Evaly's total liabilities were worth Tk407.18 crore, but it had only Tk65.17 crore in assets. 

The report stated that till March 14 this year, Evaly did not deliver products against a cumulative sum of Tk213.94 crore in advance payments from customers. It also owed Tk189.85 crore to merchants.

Based on the report, the ministry concluded that Evaly could only pay back 16.14% of its liabilities to customers.

But Evaly Managing Director Mohammad Rassel recently said in a Facebook live session that rather than resolving the issue, the platform is being pushed for closure on the basis of a report. 

He said the company can recover its losses over the next six months if the opportunity is provided to do so, adding that shutting the business down will make the consumers suffer. 

“Now we have many big companies with us. We have companies like Oppo, Samsung, Techno, Jamuna Electronics, Walton, Bashundhara Group, Bata, and Coca-Cola. Are these companies doing business with us without realizing it?” he added.

Some brands actually do seem to be content with the platform.

For instance, Md Sirajul Islam, executive director of Walton Group and head of Division of Walton Corporate Sales, told Dhaka Tribune: “We have a good business relationship with Evaly and a good quantity of orders are coming through them. Our transactions with them have been fair so far.”

But others are looking at Evaly’s claims with skepticism.

Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said that there is doubt if Evaly will be able to achieve the feat even if it is allowed to operate for the sake of recovering losses and paying off liabilities. 

“Suppose its liability is Tk90 and it has Tk10. Will it be able to recover such a huge gap with only what it currently has?” he explained. 

Moreover, even with an initial Tk200 crore investment into Evaly by Jamuna group, the platform will have to address the remaining hundreds of crores in liabilities.

“The investment from Jamuna is part of a continuous investment, with more investments to follow. We have been looking for foreign investors as well,” Rassel told Dhaka Tribune.

Asked if the investment was to meet Evaly’s liabilities, Rassel said: “We have been giving refunds and order deliveries even prior to this investment and it is not entirely linked to the issue. The fund will be used on future development and creating new scopes for business as well as delivering old orders to customers and clearing out all that is pending."

A senior official of the e-Commerce Association of Bangladesh (e-CAB), wishing to remain anonymous, said several merchants have submitted complaints against the platform for not paying several crores worth of owed money. 

Also Read - ACC probing Evaly for financial fraud

“Then there are consumers who are not getting refunds and deliveries. The decision has to be rational, considering the future of the industry and safeguarding everyone from falling victim to such a situation, rather than addressing emotions that are intertwined with the hard-earned money of people at risk,” the official added.

The official further said there are existing laws that a consumer can rely on for filing cases with the consumer rights agency, but consumers are not aware of those and hardly rely on them.

According to data by the Directorate of National Consumer Rights Protection (DNCRP),  from July of 2018 to June this year, Evaly topped the list in terms of unresolved complaints at 787, and the platform received a total of 4,932 complaints. 

In response to the allegations against the e-commerce platform, the government has also said it could liquidate Evaly’s assets if the company fails to meet its liabilities.