Ahead of festive sales, Flipkart pumps $487M into online marketplace
Flipkart Internet gets Rs 34.6 billion fund infusion from Flipkart Singapore; the funding will help Flipkart amp up its game against arch rival Amazon as the festive season sales get under way.
Singapore-based Flipkart group entity Flipkart Marketplace Private Limited infused Rs 34.6 billion (around $487 million) into its Indian subsidiary Flipkart Internet, documents filed with RoC show.
The funding comes ahead of Big Billion Days festive sale that normally takes place in October. This will be the first Big Billion Days for Flipkart after its acquisition by Walmart. While the purpose of the recent fund infusion is not clear, Walmart had earlier said if it closed the Flipkart acquisition by the end of July, the deal will impact its earnings for the year ending January 2019 by $0.25-0.30 per share and its FY20 earnings by $0.60 per share.
As per Walmart’s estimates (and a few back-of-the-envelope calculations), the Flipkart deal will make Walmart burn around $2 billion by the completion of FY 20 ($0.75 billion in FY19 and $1.35 billion in FY20).
This is also the first large cash infusion into Flipkart Internet after Walmart’s acquisition of 77 percent stake. The current fund infusion into Flipkart Internet comes two months after another group entity, Flipkart Payments, infused Rs 451 crore into its Indian digital payment arm PhonePe in July.
Though Walmart’s $16 billion investment in Flipkart was largely done through secondary share purchases, the retail giant announced it would invest $2 billion into the company as part of fresh equity investment.
The development also comes a week after the Central Board of Indirect Taxes and Customs set October 1 as the date for implementing the tax deducted at source (TDS) and tax collected at source (TCS) provisions under GST law. Ecommerce companies will now be required to collect up to one percent TCS while making any payment to sellers.
Apart from competing intensely with Amazon India, Flipkart is ramping up its new verticals like grocery and large appliances, while being reportedly in talks to acquire a stake in Hotstar to venture into the video content arena, an area where Amazon India is ahead with Prime.
