Morgan Stanley marks down Flipkart's value by 41% in a year

US-based mutual fund firm is a minority stakeholder in India's largest e-commerce company

US-based mutual fund Morgan Stanley Institutional Fund Trust, which is a minority stakeholder in India's largest e-commerce marketplace Flipkart, has marked down the value of the company by nearly 41% in the year that ended June 30.

In a filing with the US Securities and Exchange Commission on August 26, Morgan Stanley valued its holding in Flipkart at $84.3 per share for the three months that ended June, down from $142.2 a share in the same period last year.

Flipkart had raised $700 million at a valuation of $15.2 billion mid last year, but putting to use Morgan Stanley's markdown, the company's value has now dropped to $9 billion. Morgan Stanley isn't the only investor that has marked down the value of Flipkart. T Rowe Price, Valic, Vanguard and Fidelity have all done the same.

Valic, the US-based insurance corporation marked down Flipkart's value by 25% in the year that ended May 31. This 25% drop came despite the firm marking up the value of Flipkart by 10% in the March-May quarter, valuing Flipkart at close to $11.4 billion.

It's difficult to pinpoint the value of Flipkart, with individual investors making their own estimates. Morgan Stanley is probably at the lowest end, with its $9 billion valuation of the company. However, as experts have revealed the slew of markdowns are theoretical at the moment and the real value of Flipkart will show when it raises another round of investments.

Flipkart, which has come under attack from global rival Amazon, is still said to be in the lead, but Amazon has caught up quickly. In the month of July, it is estimated that Flipkart's (not including Myntra and Jabong) monthly GMV was lower than that of Amazon, the latter company having boosted its GMV through plenty of exclusive tie ups with smartphone vendors.

While co-founders Sachin Bansal and Binny Bansal might have rubbished the markdowns as mere "theoretical exercises", the markdowns could impact Flipkart's ability to raise money at a value higher than $15.2 billion. If the company goes in for a down round, apart from all the investors share values dropping, the co-founders could find themselves left with very little stake in the company.

Despite being written off as the strongest contender in India's e-commerce space, Flipkart is mounting a comeback, efforts of which started in January this year after Binny Bansal succeeded co-founder Sachin Bansal as the chief executive of the company. Since, then the company has been working on improving its customer experience and has managed to significantly reduce delivery times (one of the best indicators of customer experience) in the past few months, though it still lags behind rivals Amazon and Snapdeal on this front.