In May last year, Walmart announced purchase of a 77% controlling stake in Flipkart, valuing the e-commerce firm at around $21 billion.
Walmart’s $16-billion deal to acquire Flipkart seems to have yielded decent returns. Filings by Singapore-based Flipkart Private showed the (Flipkart) Group’s total revenues increased by 42.32% to Rs 43,615.5 crore on a consolidated basis in the year to March 2019 compared to the year-ago period. Losses, although elevated, dipped by 63.2% year-on-year to Rs 17,231.5 crore, according to the financial statement sourced from business signals platform paper.vc. This is the group’s first financial filing post acquisition by the US-based retailer.
In May last year, Walmart announced purchase of a 77% controlling stake in Flipkart, valuing the e-commerce firm at around $21 billion. Walmart’s Flipkart buy gives the global company a foothold in Indian retail market, otherwise restricted by government’s foreign direct investment (FDI) policy. India allows 100% FDI in cash and carry wholesale segment but restricts the same at 51% in multi-brand retail. Walmart operates 27 Best Price wholesale cash and carry stores across the country.
“Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart,” Judith McKenna, president and CEO at Walmart International, had said earlier.
Flipkart and Amazon jointly hold close to 80% market share in the domestic e-commerce segment, according to analysts. Smaller players have struggled to compete with the deep-pocketed firms — ShopClues announced merger with Singapore-based e-commerce platform Qoo10 earlier this week.
Analysts at Morgan Stanley estimate the country’s e-commerce sector to reach $200 billion by 2027. With close to 530 million internet users, India has the world’s second-largest internet user base, according to market research firm RedSeer Consulting.
Under Walmart, Flipkart is expanding into the food retail segment — last month, it registered a firm, Flipkart FarmerMart to undertake the business. Leveraging Walmart’s established network of supply chain, vendors and logistics, the e-commerce firm will be able to get a leg up in the crowded space and ramp up the business quickly, analysts said.BigBasket and Grofers currently lead the grocery sector.
Earlier this week, Flipkart Internet, the marketplace entity of the firm, reported losses of Rs 1,625.7 crore in FY19 on a consolidated basis compared to losses of Rs 1,160.6 crore posted in FY18. Revenue from operations, however, increased by 52% to `4,234.5 crore. Payments business PhonePe’s losses shot up by 140% to `1,904.72 crore during the period.