Excl: Flipkart-Myntra merger still on track despite the fashion e-tailer raising fresh funding
Online fashion apparel and accessories retailer Myntra, which recently raised $50 million through fresh funding, is still on track for a possible merger with the country's top e-commerce firm Flipkart, which could be the biggest consolidation move in the India e-commerce sector, sources privy to the development told VCCircle.
Times of India had reported early this year that Myntra is looking at a merger even as it is talks to raise fresh funding. Myntra went on to raise $50 million led by PremjiInvest, the private investment arm of billionaire promoter of IT giant Wipro.
Sources said despite the fresh funding Myntra is on track to merge with Flipkart.
While Myntra chief Mukesh Bansal has been opposed to the idea of a merger, it is said to be championed by common investors Tiger Global and Accel Partners, sources said.
Bansal had even emailed all his employees in January denying any stake sale when media reported that Flipkart and Myntra is looking at a possible merger.
Flipkart, co-founded by Sachin and Binny Bansal (unrelated), is already the country's top e-commerce firm but its apparel vertical is believed to be still a small player in the Indian fashion e-tailing business. Although present in various product categories it derives a big chunk of sales from mobile handsets besides books, among other categories.
Fashion e-tailing is dominated by Myntra and Rocket internet-backed Jabong.
Merchandisers who have been stocking fashion apparel with both Myntra and Flipkart say the latter is doing well for sports apparel as a sub-category. Myntra is better placed in terms of managing inventory and other processes.
Apparel is a big category in terms of profit margins and so could be particularly lucrative for Flipkart. A merger would maintain Myntra as a separate property while Myntra team will also try to ramp up sales through Flipkart.
Earlier, Sachin Bansal had said he wanted Flipkart to become the top player in online fashion retailing before the end of 2013. However, it was nowhere close to meeting this ambitious target.
Responding to a detailed email questionnaire, a Flipkart spokesperson said, "We cannot respond to market speculation." Myntra co-founder and CEO Mukesh Bansal said, "This is market speculation that I don't wish to comment on."
Emails sent to Accel Partners and Tiger Global, the two common investors, and Indo-US Venture Partners (now Kalaari Capital), which is an investor in Myntra, did not elicit any response till the time of publishing this article.
When contacted, TC Meenakshisundaram, the founder and managing director of IDG Ventures, an investor in Myntra, said, "We don't comment on market speculations."
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(Edited by Joby Puthuparampil Johnson)