Flipkart faces sellers' heat; Zetwerk IPO gets Sebi nod

A sellers' body has filed a complaint against Flipkart, alleging unfair business practices. This and more in today's ETtech Top 5.

Also in the letter:
■ TCS rallies on steady Q1
■ Fresh H-1B scrutiny
■ Tencent eyes Manus

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A group of ecommerce sellers has moved the Competition Commission of India (CCI), accusing Flipkart of abusing its market position through deep discounts and preferential treatment for select sellers, according to people in the know.

What's happening? The Forum for Internet Retailers, Sellers and Traders (FIRST) filed the case on July 6, alleging that Flipkart favours a club of preferred sellers, letting them offer prices that independent merchants simply cannot match.

FIRST said it has logged more than 300 complaints from micro, small and medium enterprises (MSME) sellers, who claim these practices have damaged their businesses.

Key allegations:

• FIRST alleges Flipkart effectively runs an inventory-led model even though it is supposed to operate purely as a marketplace.
• According to the association, Flipkart's wholesale arm supplies goods below cost to 33 preferred sellers, enabling deep discounts while Flipkart absorbs the losses.
• FIRST argues this structure gives preferred sellers an unfair edge over the rest of the merchant base.

Context: India's foreign direct investment (FDI) rules bar foreign-owned ecommerce firms from operating an inventory-led model.

• Flipkart is majority foreign-owned. Walmart bought a 77% stake in the company for $16 billion in 2018.

In other news: Earlier this week, the All India Consumer Products Distributors Federation urged the government to review how Amazon and Flipkart's comply with FDI rules in the fast-growing quick commerce segment.

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(L-R) Srinath Ramakkrushnan and Amrit Acharya, founders, Zetwerk

Contract manufacturer Zetwerk has secured approval from the Securities and Exchange Board of India (Sebi) to launch its initial public offering (IPO).

IPO details

• The offering will comprise a mix of fresh shares and an offer for sale (OFS) by existing investors.
• The final issue size and valuation will be set through the book-building process.
• Zetwerk had confidentially filed its draft red herring prospectus (DRHP) with Sebi on March 29.

Pre-IPO manoeuvres: ET reported in March that Zetwerk was in talks to raise around Rs 500 crore in pre-IPO funding from Bharat Value Fund and a group of high-net-worth individuals (HNIs) at a valuation of Rs 25,000-26,000 crore—largely in line with its previous private market value.

Financial snapshot:

• Crisil Ratings estimates Zetwerk's operating income rose to Rs 15,900 crore in FY26, from Rs 12,800 crore a year earlier.
• The ratings agency did not disclose the company's profit or loss for FY26.
• In FY25, Zetwerk trimmed its net loss to Rs 371 crore, from Rs 918 crore in the previous year.

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K Krithivasan, CEO, TCS

Shares of Tata Consultancy Services (TCS) climbed more than 4% on Friday after the IT major reported a 5% year-on-year (YoY) increase in consolidated net profit.

Financials:

• Net profit: Rose to Rs 13,349 crore, from Rs 12,760 crore a year earlier.
• Revenue: Up 14% YoY to Rs 72,275 crore.
• Order book: $9.5 billion for the quarter.

TCS shares eventually closed 1% higher at Rs 2,069 on the BSE.

Morgan Stanley said TCS' Q1FY27 print beat expectations marginally. The brokerage added that upbeat commentary on the second quarter and AI services reaching a $2.6 billion annualised revenue run rate likely buoyed the stock.

Four-year high: TCS added around 9,300 employees in the June quarter, taking total headcount to 593,798—its biggest quarterly addition in four years despite chatter about AI-led job losses.

Chief executive K Krithivasan pushed back on those fears, saying, "We do not believe that there would be a drastic reduction in employment.” The numbers back that confidence: revenue per employee rose 6.5% year-on-year in the first quarter of FY27, outpacing employee costs, which grew 5.9%.

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A fresh US Department of Labor (DOL) investigation involving H-1B visas and green cards could put Indian IT outsourcing firms under sharper scrutiny, as the sector leans heavily on the US market for revenue.

What is the investigation about?

• According to media reports, the DOL is examining alleged fraud linked to the H-1B visa and Program Electronic Review Management (PERM) green card process across several companies.
• The DOL's Office of the Inspector General said it has uncovered cases where employers allegedly filed fake applications, exploiting foreign workers and undercutting American employees.
• Cognizant has been named in the reported probe, but it remains unclear whether other Indian IT services firms are also under investigation.

Quote, unquote: "We've already started to issue dozens of subpoenas; we are going to make sure that we track down every lead," labour department inspector general Anthony D'Esposito told Fox Business on Wednesday, according to agency reports.

Also Read: No vacancy at home: Worsening job market greets H-1B returnees

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Chinese technology giant Tencent is in talks to become the largest shareholder in AI startup Manus, Reuters reported.

More on the deal: Tencent is working with Manus' early investors, including ZhenFund and HSG, to buy the company back from Meta for at least $2 billion, the report said.

The talks follow a decision by Chinese regulators ordering Meta to reverse its $2-billion acquisition of Manus.

Background:

• Meta announced the acquisition in December to strengthen its position in agentic AI.
• In April, Beijing launched a review to examine whether the cross-border deal violated China's investment rules, and then directed Meta to unwind the transaction.

The move is one of the clearest examples of China blocking a completed cross-border technology deal. It highlights a tougher regulatory climate as competition between Beijing and Washington over AI and advanced technologies intensifies.

Also Read: In blocking Meta-Manus' $2 billion AI deal, China is trying to stem brain drain