YS Exclusive: Myntra Jabong Pvt Ltd gets fresh funds of $176 M
The funding infusion also comes at a time when there has been a buzz around Myntra investing in adventure equipment and outdoor gear firm Wildcraft.
Flipkart is ensuring there is no dearth of funding for its fashion powerhouse, Myntra Jabong Private Limited. The fashion arm of Flipkart Group got a huge funding boost in the form of Rs 1,147.8 crore ($176 million) of fresh capital from FK Myntra Holdings Private Limited, Singapore, fresh filings by the company with Registrar of Companies (RoC) revealed. The infusion came this February.
The funding infusion also comes at a time when there has been a buzz around Myntra investing in adventure equipment and outdoor gear firm Wildcraft.
Queries mailed to Myntra went unanswered till the time of publishing the news. This story will be updated as and when Myntra gives a response. The company, as the name suggests, is different from “Myntra Designs private limited” that had posted revenue of Rs 2,000 crore in FY17.
Myntra Jabong Pvt Ltd (formerly known as QuickRoutes Internet Private Limited) issued 7,17,429 shares of Rs 1 face value each to FK Myntra Holdings at a premium of Rs 15,999 per share, cumulatively raising Rs 1,147.8 crore ($176 million) from the parent company.
The Myntra buyout has been one of the most successful acquisitions in the Indian startup ecosystem, especially in ecommerce. Flipkart claims it has a 70 percent combined market share in online fashion. While analysts say the number is closer to 55 percent, it is fair to state that the Flipkart Group is the clear fashion leader in e-tail and much of it has to do with the Myntra-Jabong combination's prowess in this category.
Myntra CEO Ananth Narayan has claimed in the past that the company is on track to reach $2 billion in revenue this financial year. Much of this growth can be attributed to the company's focus on private labels. It has built an enviable bouquet of 13 private label brands such as Roadster, HRX, Mast & Harbour, and Dressberry. While these private labels contribute around 23 percent to revenue, the company is planning to increase their contribution to over 35 percent. In September last year, Ananth had announced that the private label business had turned EBITDA positive.
Myntra has also gone offline with its private labels, opening its first Roadster store last year. There are reports that Myntra will launch offline stores that showcase all the private label brands of the company and also set up beauty and wellness outlets this year.
In a detailed interaction with YourStory earlier this year, Ananya Tripathi, Head of Sports and International Brands business and Chief Strategy Officer at Myntra and Jabong, had said the company will focus on a few key areas in 2018 to power growth. These include focusing on the personal care segment in which etailer Nykaa has taken the leadership position, investing in supply chain and logistics, and investing in AI led fashion.
All this means heavy investments, and Flipkart with its almost $4 billion fund raise last year, is in a position to foot the bill. Fashion is among the best margin categories online right now, with margins of 20 percent and more. However, there are challenges ahead. Data put out by advisory firm RedSeer Consulting shows that fashion as a category is not growing rapidly. Fashion accounts for 17 percent of e-tail GMV and is growing at only 18 percent annually. Mobile, on the other hand, is a notoriously low margin segment but is among the fastest growing online categories with growth rate of 51 percent.
While it is early days still for Myntra's O2O strategy, the Flipkart Group will be hoping that initiatives like offline stores will not only keep growth rates high, but will also help the company extend its leadership position in the category.