After showing a substantial loss, finally Indian e-commerce player Snapdeal has come with profit and loss statement for the financial year 2017. The Gurugram-based marketplace has posted a loss Rs 4,647 crore in FY 17 as compared to Rs 3, 340 crore in the previous fiscal i.e; 2016.
The profit-loss statement sourced from RoC filing also revealed that the loss has been impacted by a provision for “impairment of goodwill” of Rs 1,797 crore.
For uninitiated ‘Goodwill impairment’ is a charge that companies record when goodwill’s carrying value on financial statements exceeds its fair value. This situation arises when there is an erosion in the capabilities of acquired assets to generate cash flows, and the fair value of the goodwill dips below its book value.
Jasper Infotech which runs Snapdeal had also posted a loss of 12.6 per cent in revenue for FY17. Interestingly, the company’s total revenue stood at Rs 1,291.3 crore in FY17 from Rs 1,478.2 crore in the previous year.
Citing Snapdeal’s spokesperson, an ET report mentions that the financial outcome in FY17 heralds its revived focus on improving efficiency and unit economics.
Snapdeal’s loss is but obvious when one considers the company’s track record, especially for the past several years.
Meanwhile, eBay had written off its $61 million investment in Snapdeal which was followed by the company’s prime-backer SoftBank. The Masayoshi Son-led investment conglomerate had incurred a valuation loss of $1.4 billion for FY 17, mainly on account of its two biggest investments in India – Snapdeal, and Ola.
Kalaari Capital which holds about eight per cent stake in Snapdeal was also planning to sell about 35-40 per cent (around Rs 50 crore) of its overall investment of Rs 135 crore in the company.
The Kunal Bahl-steered company was in talks for a potential buyout by rival Flipkart, However, the company rejects the Bengaluru-based e-commerce giant’s multiple offers to have an independent play.
During the same period, Snapdeal sold Freecharge to Axis Bank. The deal was counted as one of the major losses for Snapdeal as compare to the digital payment company’s previous valuation.
To shed its liability and focus on core business, Snapdeal also sold its logistics and supply chain Vulcan Express to Kishore Biyani’s Future Supply Chain Solutions in an all-cash deal.
Besides, the firm was planning to sell its SaaS-based warehouse management platform Unicommerce eSolutions.
Further, the report added that the company is working behind the reduction in fulfilment cost by more than 20 per cent (as a percentage of operating revenue). It claims to achieve a drop in operational losses by nearly 25 per cent (excluding non-recurring cost on account of impairment of assets).
Importantly, the firm also has reduced its team size to bring down the burn rate. According to the company, it is on the path to making rapid progress in driving profitable growth, which will be reflected in the results for the FY18.