Snapdeal 2.0 impact: Losses for FY18 dropped by 88% to Rs 652 Cr from Rs 5,142 Cr

Snapdeal

Kunal Bahl and Rohit Bansal led Snapdeal turned around the entire business with extensive restructuring, christened Snapdeal 2.0 in August 2017. The pivot shows that Snapdeal has been able to deliver on that plan in the company’s financials in FY18.

Snapdeal’s losses are 87.32 per cent lesser than FY17. The figure was recorded at Rs 652 crore in the latest fiscal, as compared to Rs 5142.9 crore in the previous fiscal. This development is in line with the company’s constant focus on achieving operational efficiency and heading towards profitability.

The loss before tax for FY18 stood at Rs 256.6 crore, an 88.52 per cent decrease from Rs 2235.9 crore figure in FY17.

The revenue of the Gurugram-headquartered company took a 55.31 per cent dip, from Rs 1180.5 crore in FY17 to Rs 527 crore in FY18. This reduction in revenue is accounted by the company’s move to eschew the sale of high priced electronics and mobile phones that lead to high losses as well.

With Snapdeal 2.0, Jasper Infotech deliberately took an alternate path, as opposed to Davids and Goliaths of e-commerce, whereby it chose to eliminate activities that generated loss-making revenue (due to provision of heavy discounts and subsidizing operations).

The operating revenue is split between sale of product and services. The company earned Rs 305.2 crore from sale of products and Rs 130.9 crore as marketing fees.

As far as expenses were concerned, the company recorded a 77.05 per cent contraction from Rs 3146.4 crore to Rs 784.1 crore in a span of one fiscal ending March 2018.

Fulfillment expense accounting for the largest share in expenses (43 per cent) decreased 67.22 per cent from Rs 1028.2 crore to Rs 337 crore. Promotion and Advertisement expense also narrowed down by 81.65 per cent to Rs 118.3 crore.

From being a sinking ship at the beginning of FY18, the company has been making constant deliberate efforts to transform into an enterprise heading towards break even and achieve profitability.

It sold FreeCharge in July 2017 to Axis Bank, Vulcan Express to Future Group in January 2018. The US-based subsidiary Snapdeal Inc was liquidated in February 2018, and E-Agility Solution is also under the process of liquidation. Unicommerce e-solutions arm was also sold to Infibeam in May 2018.

As a result of these numerous attempts to narrow down losses and focussing only on the core activities of the e-commerce business while avoiding heavy discounting practices, and paving a consistent and steady road to positive financial health, the company achieved its first milestone in June this year by reaching a positive cash flow 3 months ahead of its target.

In a statement expressing its satisfaction with its performance, Snapdeal said, “Our prime focus last year was to maximize the operating efficiency of the marketplace ahead of implementing our planned growth initiatives. We are extremely pleased to see the incredible results from our disciplined execution with losses reducing by 88%. In addition, parts of the revenue, which were disproportionately loss-making, were identified and curtailed during the year in order to realign the business for growth with healthy margins”

The FY18 filings are a testament to the success of Snapdeal 2.0 and a promising future of the company. They also become a source of inspiration for aspiring entrepreneurs facing struggles in their business.

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