Invoking Uber, Flipkart's chief says markdowns don't matter

Battling successive markdowns in valuation by investors and third parties, Flipkart’s Chairman Sachin Bansal has said such cuts are their “opinions” and cited the case of Uber to illustrate that it will not affect fundraising plans of the e-commerce major.

“That (markdowns) does not matter. If you look, they did it to Uber as well. Uber raised at a higher valuation. They did it to one more company, they also raised money at higher valuation,” Bansal told PTI on the sidelines of an event when asked about the recent markdown by Morgan Stanley.

“I think it does not matter, people have their own opinions and it is their own opinion,” he added. Asked if this will impact the country’s largest e-commerce company's fundraising, Bansal said, “Absolutely not”. He added Flipkart was well capitalised at present and was not looking for fresh funds.

In its second consecutive action in as many quarters, Morgan Stanley Mutual Fund Trust, an investor in the company, in May lowered its estimate of the valuation of the Bengaluru-based e-commerce company by 15.5 per cent to $9.4 billion. Hosts of its investors have marked down their valuation estimates by up to 39 per cent in the recent past.

Flipkart, competing with Amazon and Snapdeal in the sector, had raised at a valuation of about $15 billion during one round of fundraising last year.

The skyrocketing valuation was one of the biggest reasons for the larger public to notice the growth of such start-ups.

However, in their bid to expand their base, these companies started giving huge discounts to customers, which dented their profitability.

According to reports, many e-commerce firms have rejigged their business models to focus on profitability.

Describing the global investment scenario as “a little shaky right now”, Bansal said companies like his continue expanding despite the loss of investor interest.

Flipkart expanded its customer base by 100 per cent last financial year and is targeting to achieve a similar growth in 2016-17 as well, he said.

Asked about the government’s move to allow retail stores to remain open round the clock, Bansal said this would not impact online sellers.

He was quick to add that e-commerce penetration in the country is very low with only two per cent of the overall shopping happening online, while this is between eight and 10 per cent in markets like China and US.