Walmart Inc.-owned Flipkart, India’s largest e-commerce company, has reported heavy losses for two of its key business units – the main e-commerce platform and its wholesale arm—for the financial year ended March 2018.
The marketplace posted a narrower loss for 2017-18 but the business-to-business (B2B) unit recorded a significantly wider loss than the year before, according to the company’s financials filed with the Ministry of Corporate Affairs.
The consolidated net loss of Flipkart Internet Pvt. Ltd, which operates the marketplace, narrowed to Rs 1,160.6 crore from Rs 1,640.2 the previous year.
The standalone net loss of Flipkart India Pvt. Ltd, the trading arm of the e-commerce company, grew eight-fold to Rs 2,064.8 crore from Rs 244.7 crore as costs jumped. Its staff expenses and finance costs doubled while the amount it spent to buy traded goods rose 50% during the year.
Meanwhile, net revenue of both the units grew significantly. Flipkart Internet clocked a 48% increase in consolidated net revenue to Rs 2,790.2 crore for 2017-18 from Rs 1,882.4 crore the previous year.
Flipkart India’s standalone net revenue jumped 40% to Rs 21,438.65 crore from Rs 15,264.42 crore.
The results pertain to Flipkart’s performance prior to be acquired by Walmart. The US retail giant acquired a majority stake in Flipkart for $16 billion in May.
Flipkart Internet generates revenue mainly from collection services, marketplace services, storage services and logistics services. The wholesale arm sells all types of goods and products including electronics, electrical goods, personal products, healthcare products, home and business products, entertainment products, software’s, toys and more on a B2B basis to its sellers.
India is emerging to be a key market for both Walmart and Amazon.
Walmart, the world’s biggest brick-and-mortar retailer, hopes the deal will give it a leg-up to its international business and take on homegrown rival Amazon.com Inc. In the fiscal year ended March 2018, Flipkart recorded gross merchandise value of $7.5 billion and net sales of $4.6 billion. The Walmart deal valued Flipkart at $20.8 billion, around 4.5 times its net sales.
Walmart recently lowered its earnings forecast for the year saying its e-commerce growth next year would be slower than the current fiscal year on account of the Flipkart acquisition.
Meanwhile, Amazon said last week the different timing of the Diwali holiday in India affected sales pattern of its international business for the third quarter .