It is no secret that e-commerce titans in India are facing a fund crunch due to rampant cash burn. India’s largest online marketplace Flipkart is no exception. Although industry rumours say that Flipkart’s talks with Walmart have fallen through, the e-commerce market leader has got some relief now. India’s largest media conglomerate BCCL (Bennett Coleman and Co Ltd.), which owns the Times of India and Economic Times among other publications as well as TV channels Times Now and ETNow, has picked up a small stake in Flipkart.
The development was first reported by Livemint which has quoted regulatory documents. According to Registrar of Companies (RoC) data accessed by media, BCCL has invested Rs 260 crore – with Rs 26 crore already invested in December 2016 – and the remaining amount will be paid when it converts the warrant into equity shares. (It was earlier reported that the deal was supposed to be Rs 500 crore.) This deal is expected to help Flipkart to advertise on BCCL platforms at a credit.
Although the current investment is worth less than one percent stake, the move will give a sigh of relief to Flipkart, which has faced seven valuation markdowns by its investors since February 2016. The 10-year-old company has so far raised more than $3 billion in seven rounds. In fact, when they raised $1 billion in July 2014, their valuation was at a peak of $15 billion. Now, after multiple devaluations, it has come down to a low of $5.6 billion. Recently, reports had surfaced that Flipkart is cutting down on its expenses by half to $20 million per month. Change of top leadership at Flipkart had made news when Kalyan Krishnamurthy took over as CEO, replacing co-founder Binny Bansal who became the Group CEO.
Although media houses tying up with companies they write about is frowned upon, BCCL already has tie-ups with taxi aggregator platform Uber, online classifieds firm Quikr, and Snapdeal’s parent company Jasper Infotech through its different arms like Times Internet and Brand Capital.