Flipkart Group is set to acquire the loss-making wholesale cash-and-carry business of its controlling firm and US retail behemoth Walmart in India.
Flipkart, which has been piloting an online B2B business for the past few months, aims to use Walmart’s B2B business to serve unorganised segments demand through the move. The homegrown e-commerce marketplace is reportedly looking at the reverse acquisition of Walmart’s B2B business.
The plan will be compliant with all regulatory requirements as it will only serve as a subsidiary of the broader group, said an ET report quoting sources aware of the development.
However, Flipkart, when contacted by Entrackr, did not comment on the development.
The report comes at a time when Walmart India’s talks with the Tata Group has made no progress. Since early 2019, Tata Group has been in the negotiations for a joint venture with the US retail giant to debut in domestic cash and carry business.
Earlier, Walmart India had a JV with Bharti Enterprises in 2007, which fell through in 2013. Last week, the company also gave pink slips to over 50 employees as part of a restructuring exercise.
“We are also looking for ways to operate more efficiently, which requires us to review our corporate structure to ensure that we are organised in the right way,” Krish Iyer, president and CEO, Walmart India had said in a statement.
Walmart began operations in India in 2007, starting with selling merchandise to local kirana stores, hotels and catering firms. Currently, it operates around 28 wholesale cash-carry stores and three fulfilment centres. It claims to have over 10 lakh consumers enrolled for its membership program.
Walmart has faced challenges in scaling the business in India, and it has been reflected in its financials. In the financial year 2019, the company witnessed a significant rise in losses.
The wholesale unit of the company posted revenue of Rs 4,065 crore while its losses mounted to Rs 171.68 crore compared to last year.
The company attributed increased losses in the period due to its investments for growth.