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Flipkart Posts a 68% Jump in Losses to Rs 8771 Cr in FY17

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In an company statement, Flipkart unleashed that its losses are increased by 68 percent to Rs 8,771 crore for the financial year ending March 2017, reveal latest documents filed with registrar of companies.

Flipkart had posted losses of Rs 5,223 crore in 2015-16, according to additional documents accessed via company data portal

The widening losses show increased investments by Flipkart to expand its base in India market even as rival Amazon pumps in more dollars for discounted deals.

The company’s revenues for the period stood at Rs 19,854 crore, up 29 percent compared to Rs 15,403 crore, earned in the previous financial year, regulatory filings showed.

The e-commerce company had suffered a dip in its valuation when it last raised USD 1.4 billion from Tencent, Microsoft and eBay. The funding valued the company at a little over USD 11 billion, compared to a high of USD 15 billion in 2015.

The company also spent about USD 225 million to acquire eBay India, in April 2017.

Subsequenty, Flipkart’s cash in hand also decreased in the given period to stand at Rs 3,578 crore, down from Rs 4,103 crore in the previous year. Foreign exchange loss for the company in FY17 also saw a sharp increase to Rs 56 crore, from about Rs 10 crore the previous year.

Flipkart’s arch rival, US-based Amazon’s International losses also swelled to over USD 3 billion in the year 2017, because of increased investments in India to counter local rival Flipkart.

However, Flipkart has managed to reign down costs in several areas as a result of cost optimization efforts that the company started to exercise in 2017.

The company’s expenses on employee salaries and other expenses increased by just 9 percent to Rs 2,052 crore. This was a shift from the high employee costs Flipkart used to incur till FY16.

The company’s spending on advertising and promotion also narrowed, compared to previous years, to grow by just 9.4% to Rs 1,188 crore.

Flipkart, under the leadership of CEO Kalyan Krishnamurthy, has made concerted efforts to reign down costs and is giving a hard push to digital advertising.

Flipkart’s push on personalised ads and digital media signals a new thought process emerging, which goes beyond discounting.

In 2015, the e-commerce players went all out to advertise their sale periods and frequent discount seasons, trying to woo customers to shop online. They would typically spend almost 80 percent of the marketing spend on TV and print ads.

In 2016, e-commerce players collectively contributed just 4 percent to the total pie of ad spend in the country, according to statistics released by AdEx India. In investment terms, e-commerce category decreased by more than Rs 500 crore across TV, Print, and Radio in 2016, from about Rs 2,100 crore in 2015.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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