Snapdeal’s FY18 loss narrows sharply but revenue more than halves
Jasper Infotech Pvt. Ltd, which runs online marketplace Snapdeal, recorded a massive drop in both losses and revenue in the financial year 2017-18 as the decision to run a leaner operation following a failed merger with bigger rival Flipkart was reflected in its balance sheet.
The Delhi-based firm reported consolidated net loss of Rs 613 crore for the year ended March 2018, show filings with the Ministry of Corporate Affairs. Snapdeal’s consolidated net loss for 2016-17 stood at Rs 4,647 crore.
Consolidated net sales more than halved to Rs 436 crore in 2017-18 from Rs 1,082 crore in the previous financial year, which was the first time in five years that the number had dropped.
Snapdeal’s parent also managed to slash its consolidated total expenditure to Rs 662 crore in 2017-18 from Rs 5,802 crore in the previous fiscal. Employee expenses dropped by two-thirds to Rs 194 crore in the year ended March.
The company currently has around 800 employees, a person familiar with Snapdeal’s workings told TechCircle, adding that the fall in employee expenditure was mainly owing to the sale of two subsidiaries.
In July last year, Snapdeal had sold its digital payments unit FreeCharge to Axis Bank.
In May this year, which is outside the period under review, Snapdeal agreed to sell technology solutions arm Unicommerce to fellow e-tailer Infibeam Incorporation Ltd.
Selling these businesses was part of Snapdeal’s efforts to turn a profit after a deal to merge with Flipkart fell through in July 2017. Since then, founders Rohit Bansal and Kunal Bahl adopted what they called a ‘Snapdeal 2.0’ strategy in a bid to revive the firm’s fortunes.
"Our prime focus last year was to maximise the operating efficiency of the marketplace ahead of implementing our planned growth initiatives,” a Snapdeal spokesperson said in an email to TechCircle. “We are extremely pleased to see the incredible results from our disciplined execution with losses reducing by 88%.”
The spokesperson added: “In addition, parts of the revenue, which were disproportionately loss-making, were identified and curtailed during the year in order to realign the business for growth with healthy margins.”
According to the MCA filings, Snapdeal also slashed its expenses on business promotion, advertising and fulfillment in 2017-18.
Snapdeal, it is learnt, has reduced the sales of high-end mobile phones and home appliances which were adversely affecting the company’s margins.
In a blog on social media site LinkedIn last month, Snapdeal’s co-founder and chief executive Kunal Bahl had said that the company now has a “single-minded focus” on its core business, that is of a “pure-play marketplace.”
Bahl also said that it has decided to “fix the economics of the business, and then resume growing it.”
The e-tailer has failed to raise any fresh funding after its biggest shareholder, Japan’s SoftBank Group, declined to invest in the firm and went on to fund Flipkart.
At its peak, Snapdeal was valued at more than $6 billion and was considered to be a close competitor to Flipkart. Since 2015, it has, however, lost second position to Amazon and has consistently been losing market share.