Flipkart parent invests $201m into Indian wholesale unit

Photo: Reuters

Flipkart’s Singapore-incorporated parent company has infused Rs 1,431 crore ($201 million) into its Indian wholesale entity, amidst an expensive market-share battle against arch-rival Amazon India and a regulatory tussle with the government, which has come out with new foreign direct investment (FDI) rules for e-commerce firms that threaten to upend India’s $18-billion online retail market.

According to regulatory filings that were sourced from business intelligence platform Paper.VC, Flipkart’s latest funding infusion from its parent Flipkart Pvt Ltd was approved in December. Separately in December, Flipkart’s Singapore-listed entity infused roughly Rs 2,190 crore ($304 million) into its Indian subsidiary, according to regulatory filings.

Mint had reported on October 1 that Walmart Inc.-owned Flipkart has initiated talks with strategic investors to raise fresh capital after discussions with Google Inc. collapsed earlier last year.

Flipkart is expected to burn billions of dollars over the next few years, as it looks to establish its supremacy in the Indian e-commerce business against a resurgent Amazon. On 22 May, Mint reported that Flipkart is likely to burn through as much as $2 billion in cash over the next 18 months—an affirmation that sales growth, rather than cutting losses, remains the top priority for the online retailer after being bought out by Walmart.

Last month, in an interview with Mint, Flipkart CEO Kalyan Krishnamurthy had said that the company had witnessed transaction growth of more than 80% in some months as e-commerce is booming again in the country, even as Flipkart plans to push newer categories such as furniture and groceries over the next three years. Krishnamurthy had also indicated that Flipkart may make a play in the video content business, either through a partnership or by building out a new business internally.

Flipkart’s payments arm PhonePe may also raise funds separately as it seeks to catch up with bigger rival Paytm. Walmart has indicated that it is willing to continue funding PhonePe for the near future, but is open to the idea of bringing in other strategic partners. If PhonePe also gets more strategic investors outside Walmart, it may look to raise up to $1 billion sometime next year, Mint had reported in October.

PhonePe’s position inside the group has gained even more prominence over the past few months, following Flipkart co-founder Binny Bansal’s exit and Walmart’s move to roll online fashion retailer Myntra into Flipkart. While Myntra now reports into Flipkart CEO Kalyan Krishnamurthy, PhonePe has been kept independent within the group and its founders Sameer Nigam and Rahul Chari now report directly to the Flipkart board— a clear indication that PhonePe may be spun off to bring in external strategic investors, even as Walmart retains a majority stake in the payments entity.

Rival Amazon has also been burning hundreds of millions of dollars, as it looks to upend Flipkart’s leadership position. According to Mint research, Seattle-based Amazon has nearly exhausted its original $5-billion commitment towards India and may soon have to invest more into its India business.

This article was first published on livemint.com

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.