Shopclues explores merger talks with Flipkart and Paytm

Shopclues

India’s home-grown e-commerce firm Shopclues is in talks of a merger with Flipkart and Paytm, said two sources aware of the development. As per sources, talks are in the preliminary stage with both companies.

Importantly, this is the second time Shopclues engaged in acquisition talks with Flipkart and Paytm. Last year, Alibaba, an investor in Paytm, and ShopClues had reportedly held talks for a possible merger.

Entrackr learnt from above sources privy to the developments that ShopClues is looking for merger option as it needs more capital to continue its operations going. A questionnaire to Flipkart, Paytm and Shopclues remain unanswered till the publication of the article.

“Recent talks with Flipkart is triggered by Tiger Global while a merger with Paytm is being explored by the management of both companies,” said one of the sources.

Till date, the Gurugram-based company has raised $281 million from clutch of investors including Tiger Global, Nexus, Bennos and GIC amongst others.

The disclosure of the company’s financials 2017 made it clear that the firm has zero net worth. “The company has incurred accumulated losses amounting to Rs 871 crore as on 31 March, 2017 resulting in complete erosion of the net worth of the company.”

The losses stood at Rs 332.6 crore, a 5 percent dip from the previous year. And expenses will increase in the coming year with the addition of Goods and Service Tax (GST) compliant for the company and maintain its sellers on the platform.

This makes hard for Shopclues to stay on the course for profitability.

Earlier Sanjay Sethi, co-founder, and CEO of ShopClues, had told Business Standard that the firm was open to merger proposals. “I am open to everybody. Why would I not be? The central point is that we should be able to capture the biggest market and the most profitable market of 400 million people who are still on the sidelines of the digital revolution. We are always talking to everyone; it would be unintelligent of me not to,” Sethi had said.

Flush with funds, Flipkart is also eyeing multiple investmentss and acquisitions. Recently, it acquired eBay’s India business and is in talks to invest in Pepperfry, Swiggy and Urbanclap.

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