Flipkart invests Rs 1,431 cr in wholesale unit amid e-com policy concerns

According to the firm's regulatory filings, Flipkart's parent entity was issued '486,861 equity shares through the rights issue on January 7, 2019, at a price of Rs 29,400 per share'

Flipkart India Private Limited, the wholesale entity of the Walmart-backed home-grown e-commerce company, has received Rs 1,431 crore from its Singapore-based parent entity, Flipkart Private Limited. 

The investment comes at a time when the government is tightening norms for online retailers, with its revised e-commerce policy that could have a huge impact on online retailers such as Flipkart and Amazon.

According to the company’s regulatory filings sourced from business intelligence platform Paper.vc, Flipkart’s parent entity was issued “486,861 equity shares through the rights issue on January 7, 2019, at a price of Rs 29,400 per share.”

Last December, Flipkart had invested Rs 2,190 crore into the same unit.

In 2017-18, Flipkart India Private Limited had seen its net losses jump almost ninefold to Rs 2,064 crore, when compared with the previous year. But, during this period, the firm’s revenues rose 39.11 per cent to Rs 21,658 crore. “The increase in net loss is due to employee benefit expenses, finance cost, (and) purchase of traded goods,” Flipkart had said in the regulatory documents.

India’s e-commerce sales are expected to grow at a compound annual growth rate of 30 per cent through 2026-27 and touch $200 billion in gross merchandise value, according to financial services firm Morgan Stanley. In May last year, the US retail giant Walmart bought 77 per cent stake in Flipkart, in a transaction that valued Flipkart for over $20 billion. But the government’s revised e-commerce policy announced in December last year has barred e-commerce players from selling products by firms they own a stake in. Vendors also cannot have more than 25 per cent of their revenues coming from a single platform. The rules, which come into effect on February 1, bar online retailers from selling goods exclusively on their platforms. Major e-commerce companies have written to the government and sought an extension of the deadline.