Flipkart’s largest unit posts hefty revenue growth cuts losses

  • Flipkart India Pvt Ltd, the largest unit of India’s biggest e-commerce marketplace, was able to increase revenues by 43 percent and cut losses by over 34 percent in the financial year 2015-16.
  • Flipkart has set up a complex holding structure, with several entities listed in Singapore, making it hard to ascertain the exact revenue and loss figures.
  • Flipkart had enjoyed a peak valuation of $15.2 billion, making it among the top valued start-ups in the world.
  • With increasing competition from rival Amazon and an inability to curb losses, Flipkart has seen its value erode, making it harder for the company to raise fresh funds at a valuation it wants.
  • Large investors such as Walmart – Amazon’s arch nemesis in the US – are said to have walked away from investing in the company after being unable to settle on a price agreed upon by both parties.
  • Flipkart stated that while there were losses, revenue growth was strong and that its cash-and-carry business would turn profitable with scale.
  • Since taking over as CEO early last year, Binny Bansal has been working to reduce losses at Flipkart and recently made a claim that the company will reduce cash burn by half in the coming months.
  • This has been made possible with an increased push to improve margins, especially from its fashion units Myntra and Jabong, and also cut massive employee costs by rationalizing its top management team.
  • Any reduction in losses could mean the return of investor confidence, something Flipkart needs badly if it is to take on Amazon’s onslaught. Amazon’s losses are expected to swell to $1 billion in the current financial year.
  • Therefore we can see how Flipkart’s revenue is growing by cutting losses.
Source – http://bit.ly/2iuzdLh