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Walmart effect? Flipkart cut losses by 63%, revenue up 42% in FY19 under new management

Sandeep Soni
Flipkart video content, Flipkart Video Originals, amazon prime, netflix, hulu, hotstar, zee5, Flipkart content play, tvf play, Studio Next, Frames and Sikhya Productions, Flipkart bollywood

Flipkart Private Limited, the Singapore parent of the Indian e-commerce company Flipkart has disclosed its performance for the first time under the new management of Walmart. The company, which was acquired by the American retail giant in August 2018, has been able to cut its losses by 63 per cent to Rs 17,231 crore ($2.42 billion) for FY19 from Rs 46,895 crore ($6.6 billion) in the preceding financial year. Amazon's arch-rival Flipkart led by Kalyan Krishnamurthy also posted an increase in total revenue by 42 per cent in FY19 to Rs 43,615 crore ($6.14 billion) from Rs 30,644 crore ($4.32 billion) in FY18.

The group's overall expenses, according to annual report sourced by business signals platform Paper.vc, also saw a significant dip to Rs 17,281 crore ($2.4 billion) for the year ending March 31, 2019 from Rs 46,895 crore ($6.6 billion) for the year ending March 31, 2018.

A Flipkart spokesperson didn't comment on the performance.

Importantly, the fall in expenditure is driven by a steep cut in finance cost instead of "any overall optimization in operating expenses," said Vivek Durai, Founder, Paper.vc. Finance cost made up for a large part of FY18 expenditure mostly towards accounting treatment of convertible securities. "If one were to exclude finance costs, overall group expenditure actually went up by 118 per cent," he added.

Also, Flipkart's employee benefit expenses increased by 58 per cent to Rs 4254 crore ($600 million) after acquisition by Walmart.

Also read: ShopClues to merge with Singapore-based Qoo10, deal to aid over 7 lakh small and micro-merchants

However, Flipkart's three key units-Flipkart Internet (marketplace arm), Flipkart India (wholesale division), and PhonePe (payments vertical) registered high losses. While PhonePe registered Rs 1,904 crore in net loss — 8 times its total income of Rs 245.8 crore in FY19, Flipkart India's net loss stood at Rs 3,836 crore for FY9 - a jump of 85.91 per cent from Rs 2,063 loss for FY18 against its net income of Rs 30,931 crore, up from Rs 21,657 crore during FY18. For Flipkart Internet, the losses were worth Rs 1,625.7 crore in FY19 that increased from Rs 1,160.6 crore in FY18 while operational revenue stood at Rs 4,234.5 crore in FY19-a 52 per cent increase from FY18.

For Amazon's India business, its registered cumulative losses across multiple units stand at over Rs 7,000 crore, according to the RoC filings sourced by Paper.vc.  According to the filing, Amazon is investing more than Rs 4,400 (Over $600 million) in the India business including Rs 3,400 crore in its marketplace unit Amazon Seller Services, Rs 900 crore in payments arm Amazon Pay, and Rs 172.5 crore in food retail vertical Amazon Retail India. Flipkart also is reportedly foraying into food retail vertical with a new business called Flipkart Farmermart.

Even as Flipkart, Amazon lead the e-commerce market in India which is likely to grow to $84 billion in 2021 from $24 billion in 2017, according to a report by Deloitte India and Retail Association of India, the market saw another casualty as e-commerce marketplace ShopClues is getting merged with Singapore-based e-commerce firm Qoo10, PTI reported, at a valuation of less than $100 million. ShopClues was earlier valued at over $1 billion in 2015. Snapdeal too saw its growth decline amid intense competition from Flipkart and Amazon and after a failed merger talks with Flipkart, the company switched its focus on small cities to bring back growth.