Amazon pumps nearly $400 mn into Indian arm ahead of Walmart-Flipkart deal

Amazon pumps nearly $400 mn into Indian arm ahead of Walmart-Flipkart deal
Photo Credit: Reuters
9 May, 2018

E-commerce giant Amazon has pumped Rs 2,600 crore (around $393 million) into its Indian unit ahead of local rival's Flipkart likely acquisition by retail behemoth Walmart, reports The Economic Times.

The latest infusion brings Amazon's total investment in Amazon Seller Services Pvt. India, its local unit, to more than Rs 20,000 crore.

Amazon had earlier committed to invest $5 billion (around Rs 32,500 crore) in its Indian operations.

A resolution for the latest infusion was passed on April 26, show Amazon India’s filings with the Registrar of Companies. 

Email queries sent to Amazon did not elicit a response till the time of publishing this report.

Amazon India had in January received $306.3 million (Rs 1,950 crore) from its parent company, a couple of months after it got its largest one-time capital infusion of $446 million (Rs 2,900 crore)

At the same time, Amazon Seller Services also nearly doubled its authorised share capital from Rs 16,000 crore ($2.4 billion) to Rs 31,000 crore ($4.7 billion). 

Amazon Seller Services runs the e-commerce marketplace business, including its sellers’ network. It has more than 2.5 lakh registered sellers on its platform.

Bracing for competition

Amazon's fresh investment is possibly in anticipation of heightened competition from Flipkart, India's largest e-commerce company. 

Walmart Inc is set to announce its purchase of a majority stake in online retailer Flipkart later on Wednesday with its chief executive officer Carl Douglas McMillon camping in Bengaluru, a person close to the development told TechCircle

The transaction will likely value Flipkart around $20 billion and Walmart will likely acquire around a 74% stake in the company, mostly by buying shares from existing investors.

Earlier media reports had suggested that Amazon had also made an offer to buy Flipkart, proposing to buy 60% stake in the e-tailer.

Walmart is likely to pump in fresh capital into Flipkart and drive its expansion into the online grocery segment. Amazon has already been increasing its presence in the grocery space in India in recent months.