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Flipkart Group, the Singapore-based parent company of Indian e-commerce major Flipkart, saw losses rise by 68 per cent to Rs 87.71 billion on a revenue of Rs 198.5 billion in the financial year that ended 31 March 2017. While the company’s revenue grew by 29 per cent on a year on year basis, its losses shot up primarily due to a drop in its valuation. Flipkart Group attributed a loss of Rs 34.1 billion to ‘fair value loss on derivative financial instruments’ according to filings it made in Singapore which were sourced by data intelligence platform Paper.vc. In last April, Flipkart reported that it has closed a $1.4 billion funding round led by Chinese internet major Tencent, at a valuation of $11.6 billion, down from its previous valuation of $15.2 billion. Omitting the losses due to its increase in finance costs, Flipkart's losses for the year that ended March 2017 would have come in at Rs 53.5 billion, or just marginally up from the Rs 52.2 billion loss the company had posted in the previous year. In the 18 month period before Flipkart managed to raise funding from Tencent, Microsoft and eBay, the company had cut discounting in an effort to conserve cash. This would have been reflected in Flipkart’s losses was it not for the massive loss incurred due to a drop in the company’s valuation. Since then, Flipkart has raised a massive $4 billion in two rounds, the second footed by Japanese investor SoftBank. The money has brought the company back in the running to compete for the top spot in India’s e-commerce space which US online retail giant Amazon is desperate to win. India being the last large open market globally has drawn in several of the largest investors and companies globally. While the period between mid-2015 until the end of 2016 saw funding dry up for startups in the country, post that there have been several multi-billion dollar investments made in large Indian internet firms. While experts had then opined that the days of massive discounting in Indian e-commerce was over, the resurgence of capital in the space has led to yet another price war being fought.
Post Flipkart’s funding rounds, rival Amazon stepped up the pace of its investments in the country, investing Rs 62 billion in its e-commerce marketplace in 2017 alone.Both Kalyan Krishnamurthy, CEO of Flipkart, and Amit Agarwal, head of Amazon’s India business, have likened India’s e-commerce space to being just a day old. They have said that the sector will require far larger investments in the coming years to help grow it to its full potential. For now, both Flipkart and Amazon are heavily investing in the grocery category, which according to them will help transition customers from making purchases on their platforms once or twice a year to several times a month. Globally, the business of selling groceries online has proven to be capital intensive and the same is expected here in India. Expecting a challenge in this space, India’s largest online grocer BigBasket recently announced that it had raised $300 million in funding led by Chinese Internet giant Alibaba. Apart from Softbank and Tencent, Alibaba is turning out to be one of the most prolific investors in Indian Internet companies, as it looks to win the market and drive out its biggest rival Amazon.