Clues Network, which operates troubled ecommerce firm ShopClues and is soon to be acquired by Singaporean company Qoo10, has reported accumulated losses of Rs 1,172 crore for the financial year ended March 31. However, the company has narrowed losses in financial year 2018-19.
The company also posted a negative net worth, as its liabilities were more than its total assets by Rs 33 crore, regulatory filings show.
In FY19, ShopClues posted a net loss of Rs 69 crore against a loss of Rs 208 crore in the previous year, regulatory filings showed. Its total expenditure fell nearly two times to Rs 271 crore owing to cuts across the board.
“The company has undertaken certain cost rationalisation initiatives to reduce its losses during the year,” ShopClues said in the filing.
ShopClues’ services costs, which includes transport and packaging expenses, fell 48% to Rs 89 crore and employee costs fell 40% to Rs 66 crore, mainly on account of lower salaries. A major expense, advertising, fell nearly two times to Rs 70 crore.
ShopClues also registered a fall in the top line to Rs 204 crore against Rs 271 crore in the previous year due to a 26% fall in sales to Rs 162 crore. Other operating revenue also fell to Rs 41 crore from Rs 51 crore in the previous year.
In November, ShopClues announced its merger with Singapore-headquartered ecommerce platform Qoo10 after the former suffered heavy losses in the past few years and amassed massive debts. Homegrown ecommerce firm Snapdeal was also in talks to acquire Clues Network, but the deal did not go through on valuation issues and Snapdeal did not want to take the debt on its books.
The deal is yet to be completed, subject to certain closing conditions, the filing said.
Qoo10 expects the acquisition to aid its expansion in the Indian market. Backed by Singapore Press Holdings, eBay and Saban Capital Group, Qoo10 has a presence across Indonesia, Malaysia, China and Hong Kong, and plans to expand to other Asian countries.
In December 2019, the company’s parent Clues Network infused $800,000 in the Indian unit, separate filings show.
ShopClues was valued at over $1 billion in 2016 after an investment by Singapore’s sovereign wealth fund GIC and others.
Founded in 2010 by former Wall Street analyst Sandeep Aggarwal, Radhika Ghai and former eBay executive Sanjay Sethi, ShopClues received some support during its financial difficulties from its existing investors with a $16-million infusion in August 2018. The company had laid off 50% of its employees over the year as it ran out of cash. While Ghai took over as chief business officer at ShopClues, Sandeep Aggarwal moved on to set up Droom.