Flipkart India unit's FY18 losses zoom 742% in spite of 39% rise in revenue

Losses of Flipkart India Pvt Ltd — the marketplace unit of Flipkart — grew by 742 per cent in 2017-18, though revenue growth of the unit during the period was 39 per cent. In the financial year ended March 31, the unit reported losses at Rs  20.6 billion, from Rs 2.45 billion the previous year, according to the company’s annual return, sourced from business intelligence platform Tofler.

Revenue for the unit, Flipkart’s largest, in FY18 was Rs 216.5 billion, from Rs 155.6 billion in FY17. This rise was almost twice that of the earlier year. 

Flipkart had raised a combined $3.9 billion from a group of investors during FY18, including Tencent and SoftBank. It also came ahead of the company’s sale of a 77 per cent stake to US retail giant Walmart for $16 billion, a deal announced in May this year.

Flipkart Internet, the arm which runs the company’s online platform, saw its losses fall nearly 30 per cent in FY18, to Rs 11.5 billion. Its revenue grew 30 per in the period, to Rs 30.6 billion. 

The loss during FY17 was nearly Rs 16.4 billion, with revenue of Rs 22.5 billion, according to documents it filed at the registrar of companies.

Despite the reporting of financials by Flipkart’s two largest units in India, it is still hard to gauge the e-tailer’s overall performance. For, the company owns multiple subsidiaries to manage its different operations. 

For example, the combined losses of Flipkart India and Flipkart Internet in FY17 was Rs 18.8 billion, only a small part of the overall loss of Rs 87.7 billion that the Singapore-based parent entity, Flipkart, reported for the year.

Sector watchers and analysts say Flipkart’s burning of cash is expected to grow in the coming years. It is hoping to stay ahead of Amazon by deploying billions of dollars to win the India market. Some estimates suggest Flipkart’s loss could be close to $2 billion in FY18 (Rs 146 billion at current rates).

Amazon claims it is growing at a faster pace. However, Flipkart remains slightly ahead in market share. Even in the ongoing festive sale period, analysts estimate Flipkart has the edge in driving a higher gross merchandise value (GMV) when compared to the US giant.

Yet, Amazon says it isn’t so focused on GMV. Rather, that it wishes to become a marketplace where customers buy everything and anything. The deep-pocketed US major says its focus is to bring new customers to its platform and retain them as regulars, through programmes such as Prime.

Its chief financial officer, Brian T Olsavsky, told analysts on Thursday that the company had seen 60 per cent growth in new customer addition during the ongoing  Diwali sale.