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Home / Companies / Company-results /  Snapdeal’s loss widens to Rs264.6 crore in FY14

Bangalore: Jasper Infotech Pvt. Ltd, which runs Snapdeal.com, reported a loss of 264.6 crore for the year ended March, compared with a loss of 120 crore in the previous year, as India’s second biggest e-commerce firm spent heavily to keep up the rapid pace of sales growth set by bigger rival Flipkart and to fend off Amazon India.

Snapdeal, which has raised $233.7 million so far this fiscal year from investors including BlackRock Inc, eBay Inc and others, also reported a five times jump in revenue to 168.1 crore in 2013-14, according to documents with the Registrar of Companies (RoC).

Flipkart India Pvt. Ltd had reported a loss of 281.7 crore on sales of 1,180 crore for the year ended March 2013, the latest for which figures are available.

Snapdeal was valued at more than $1 billion when it raised $100 million in May. It is in talks with SoftBank and other investors to raise more than $600 million in fresh funds, Mint reported on 18 September.

Snapdeal is at risk of being overtaken in sales by Amazon India, which launched its India marketplace in June 2013 and has since quickly increased product assortment, spent heavily on marketing and cut prices significantly to become the biggest threat to Snapdeal and Flipkart, analysts say.

Flipkart, Snapdeal and Amazon India are engaged in an aggressive and cash-intensive battle to gain customers in India’s fast-growing e-commerce market, and Snapdeal’s huge loss numbers—the company’s losses far outstripped its revenues—indicate that it is becoming ever more expensive to win customers.

Online retail is valued at $3.1 billion and is estimated to grow to $22 billion in five years, according to a November 2013 report by brokerage CLSA.

India’s biggest online retailer Flipkart said in late July that it received as much as $1 billion in fresh capital, in a round led by existing investors Tiger Global and Naspers.

Soon after Flipkart announced the $1 billion fund raise, Amazon.com Inc’s chief executive Jeff Bezos said the world’s largest online retailer would invest as much as $2 billion into its India business as it aims to become the leader in one of the fastest-growing e-commerce markets in the world.

Snapdeal’s co-founder and chief executive Kunal Bahl said in an interview last month that the company was recording its highest-ever sales after it started sponsoring popular reality TV show Bigg Boss. Snapdeal is aiming for gross merchandise value (GMV) of over $170 million this month in the festive season sale period, Bahl said then.

GMV is the value of goods sold on a site, but does not account for discounts or even sales returns. So, if a firm says its GMV is $10 million, it could actually book sales of anywhere between $0.5 million and $5 million.

To be sure, e-commerce companies are valued on GMV, not on net sales.

Delhi-based Snapdeal was founded by Bahl and Rohit Bansal as a daily deals platform, selling coupons to groups of customers (similar to the Groupon model), but converted to a marketplace in late 2011, first offering services and then adding a wide range of products including apparel, books and electronics through the third-party merchants.

A marketplace provides a selling and technology platform to other sellers. Indian law does not allow foreign direct investment (FDI) in e-commerce but allows it in marketplaces.

According to documents with the RoC, Bahl and Bansal, along with chief financial officer Aakash Moondhra and engineering head Amitabh Misra, pulled in salaries of 1 crore per annum each.

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