Amidst ongoing protest by sellers and traders bodies over violation of FDI rules for e-commerce marketplaces, Amazon India’s largest seller, Cloudtail, has revealed its financial performance for FY19.
Cloudtail, a joint venture between Amazon and Infosys founder NR Narayana Murthy’s Catamaran Ventures, has once again hit the profitability milestone for the financial year ending on March 31, 2019.
Cloudtail has posted a revenue of Rs 8,945 crore, whereas profit stood at Rs 29.4 crore in FY19. For the previous fiscal, Cloudtail’s income and loss were recorded at Rs 7,149 crore and Rs 4.11 crore respectively.
The Delhi-based company became profitable for the first time in FY17 when it recorded a profit of Rs 1.59 crore after a Rs 30 crore loss in FY16.
With revenue shot up by 25%, Cloudtail’s expenses also increased by 27% to Rs 8,899 crore. Interestingly, it spent Rs 8,537 crore alone on the purchases of stock, said an ET report quoting Tofler.
While other sellers are yet to reveal their financial performance for FY19, Cloudtail’s growth, despite reducing of a stake in Amazon’s e-commerce marketplace, reflects a good sign for them.
Amazon reduced its stake in Prione from 49% to 24% following the implementation of Press Note 2 in February so that its subsidiary Cloudtail, would be eligible to sell on the marketplace.
The company claims to have made several changes in structure to stay in compliance with all regulations. However, the last quarter of FY19, when press note 2 came in effect, had a minimal impact on the firm’s financial.
As of June 2019, Cloudtail parent, Prione, has enabled more than 44,000 small and medium businesses (SMBs) in India across 30 product categories.
Apart from Cloudtail, Appario, the other Amazon joint venture with founders of Patni Computers, is the next largest seller on Amazon’s India marketplace.
Of late, traders body CAIT, which represents over 500,000 merchants and traders in India, has alleged e-commerce marketplaces including Amazon and Flipkart for violating FDI norms mentioned in press note 2.
Both firms, however, denied the allegations on which CAIT demands intervention by Competition Commission of India (CCI).