Bengaluru: Flipkart Internet, the marketplace arm of Flipkart that books commissions on each sale, reported losses that more than doubled from last year, at a time when India’s leading e-commerce firm is locked in a bruising market share battle with arch-rival Amazon India.
For the year ended March 2016, Flipkart Internet Pvt. Ltd reported a loss of Rs2,306 crore, compared with Rs1,096.4 crore during the same period last year, according to documents filed with the Registrar of Companies (ROC). Flipkart Internet’s sales rose to Rs1,952 crore, according to the regulatory filings.
Under the stewardship of Binny Bansal who took over as CEO in January, Flipkart has aggressively slashed costs and more than halved monthly burn rates to roughly about $40 million. However, the company has still spent copious amounts of money beefing up internal processes, boosting technology and building warehouses across the country, as part of a desperate push towards batting Amazon and reversing market share losses to the American e-commerce giant.
Flipkart, which has raised at least $2.6 billion in venture capital funding over the past three years from investors such as Tiger Global Management, DST Global and Accel Partners, is currently in talks to raise another fresh round of funds. Mint reported on 9 October that Flipkart will hit the market to raise $500 million-$1 billion in fresh funds before the end of the year. The company last raised cash in the middle of 2015 from existing investors led by Tiger Global at a valuation of $15 billion.
Mint also reported on 25 November that Flipkart is now considering appointing an investment bank for the first time in years to try and attract new investors to its next round of funding. India’s most valuable Internet company has so far held talks with several investment banks including Goldman Sachs Group Inc. as it decides on getting help to raise funds.
With Amazon India now breathing down Flipkart’s neck, the biggest challenge for India’s e-commerce poster boy will be to ensure that it grows rapidly and increases market share by pumping in more money towards marketing and discounting efforts, while also ensuring that losses don’t spiral out of control.
While the going has been tough for Flipkart over the past year, under CEO Bansal and commerce head Kalyan Krishnamurthy the company has shown signs of resurgence and glimpses of its former trailblazing self. India’s e-commerce poster boy comfortably outsold Amazon in the key festive season month of October, possibly getting a springboard to take the fight back to the American firm.