Flipkart arm posts 19% growth in revenue

The marketplace arm of India's leading e-tail firm reports revenues of Rs 15,264 cr for FY17

Flipkart India Pvt Ltd, the marketplace arm of India’s leading e-commerce firm Flipkart, reported revenues of Rs 15,264 crore for the year ended March 31, 2017, representing a 19 per cent growth rate over the previous year, according to documents filed with the Registrar of Companies and sourced through Tofler. The turnover of Flipkart’s largest arm in India stood at Rs 12,818 crore in the financial year 2015-16.

The profit and loss figures for FY17 were not mentioned in the documents, which were reviewed by Business Standard. In the previous year, losses stood at Rs 826.7 crore for the unit. A Flipkart spokesperson did not comment immediately.

While Flipkart India Pvt Ltd represents just one of several units the e-commerce company has set up in India, it is by far the largest in terms of revenues. In 2015-16, Flipkart Pvt Ltd, the parent entity listed in Singapore, had posted revenues of Rs 15,403.3 crore. Its losses for the year stood at Rs 5,769 crore, according to that filing.

The paltry growth in revenues is representative of the slowdown Flipkart saw during 2016, which allowed rival Amazon to narrow the gap. The fallout of this slowdown also resulted in Tiger Global, the largest investor in Flipkart at the time, appointing Kalyan Krishnamurthy to head the business and elevate the co-founders, Sachin Bansal and Binny Bansal, to non-operational roles.

While Flipkart has mounted a comeback since then, outperforming Amazon during the festive seasons in both 2016 and 2017, the company’s valuation has taken a hit of around 30 per cent. Flipkart raised nearly $4 billion this year from investors, including SoftBank and Tencent, at a valuation of $11.6 billion, down from a peak of $15.2 billion.

Currently, both Flipkart and Amazon stake a claim to be India’s largest e-commerce marketplace. Industry watchers and analysts such as RedSeer Consulting, however, say Flipkart continues to be in the lead, but estimates of the company’s market share is a hotly contested topic.

During the month-long festive sale period in October, Flipkart claimed it had captured over 70 per cent of India’s e-commerce market.

Flush with funds, Flipkart is now focusing on reducing losses by introducing private labels that yield higher margins while also trying to get consumers to buy more often from it by introducing categories such as groceries. The company is also working on its own loyalty programme, which will compete with Amazon’s Prime that has so far been a runaway success in India.

On the shareholder front, the pot continues to boil for Flipkart. Tiger Global, the largest investor in the company, has indicated that it wants a partial exit. Out of the $2.5 billion SoftBank committed to invest in the company in August, between $1.2 abd 1.4 billion will go into buying out stake of other investors.

Business Standard reported on November 30 that SoftBank had reached out to other investors in Flipkart with the intent of purchasing their shares. The company was willing to buy out stake of other investors at a valuation of $9-10 billion.

E-TAILING SAGA

• The turnover of Flipkart’s largest arm in India stood at Rs 12,818 crore in FY15-16

• In 2015-16, Flipkart had posted revenues of Rs 15,403.3 crore

• The paltry growth in revenues that Flipkart saw during 2016 allowed Amazon to narrow the gap

• Currently, both Flipkart and Amazon stake a claim to be India's largest e-commerce marketplace