Indian e-commerce major Flipkart reported a higher loss of 68 per cent in FY 2016-17 at Rs 8,771.4 crore, which is perhaps unsurprisingly when compared with loss in FY16 and its recent fall in valuation. The revenue of the company, however, grew by 29 per cent and stood at Rs 19,854.6 crore in the last fiscal.
The figures appeared on Flipkart’s filing with Singapore’s RoC and were first reported by a business intelligence platform, paper.vc.
The losses soared after the company raised capital led by Chinese Internet conglomerate Tencent at a much lower valuation of $11.6 billion in April 2017. The e-commerce company had raised $700 million from Tiger Global and existing investors, including Steadview Capital, at a massive valuation of $15 billion in 2015.
The fall in valuation raised the borrowing cost of the company to Rs 4,308 crore. The fair value loss on derivative financial instruments stood at Rs 3,412 crore in FY17, as reported by ET.
Interestingly, if the borrowing and other costs are removed, the loss of the e-commerce company is far less and has increased only by 2.4 per cent. Flipkart has been able to limit the expense on human resources and advertising in a large way.
Meanwhile, in an effort to give a push to online sales, another online retailer, Amazon, is pumping massive investment into the ecosystem.
The Seattle-headquartered online retailer suffered an overall loss of $936 million in the third quarter of 2017. The figure was as high as 73 per cent from the September quarter of 2016, when Amazon showed a loss of $541 million.
Besides, between January and September 2017, the online retailer suffered a loss of $2.1 billion, which is a nearly threefold rise from $796 million in the same period in 2016.
According to Amazon, its international expansion, primarily in India, has caused the company more losses as it is continuing to add benefits for its buyers.
Amazon has outrun its rival Flipkart in terms of total investments in India.
In this case, as the online behemoth is betting big on India and not shying away to depute large investment, Indian e-commerce major Flipkart will not be able to control expenses as it managed to do in the last fiscal.
As the International e-commerce giant puts more money in India, Flipkart — with heavy-weight investor Softbank — has enough funds and reasons to fight the e-commerce battle on the ground of capital.