To keep Jabong alive, via the ventilatory system it is on right now, Rocket Internet’s Global Fashion Group has decided to inject fresh funds — to the north of $20 Million — into the ever loss-making fashion-only ecommerce platform Jabong.
While there have been no confirmations, Economic Times has extracted this news from an unnamed source, who was in a meeting held regarding the issue in GFG’s Luxembourg HQ.
The source told ET,
The board has agreed to put more than $20 million in Jabong.
Reportedly, this money has been infused to keep the company running for one more year and see how it goes.
In an e-mailed reply to The Tech Portal, Jabong said, that since it is a wholly-owned subsidiary of Global Fashion Group, it receives funding on a regular basis, similar to the funding structure of other multi-national corporations.
The company further added,
There are therefore no pre-agreed funding commitments, howsoever small or large. GFG has raised over $1.5bn in capital in its history and its Board remains unanimously committed to all regions it operates in, including India.
Jabong has made a number of recent senior management hires, and has also recently witnessed record operating performance. These facts, which are supported by public filings on our current investment rate, are clearly evident of GFG’s commitment to growing Jabong as India’s most loved online fashion store.
We deny any other rumors or speculations that are to the contrary.
Just days back, Jabong had sent out a comprehensively drafted press note, wherein the company claimed Janaury, as the best ever sales month for the company. It further stated that not only did Jabong record its lowest cash burn in 24 months and best improvement in EBITDA margin in a EOSS month, its parent company Jade eServices Pvt. Ltd. also registered a staggering month-on-month growth of almost 35 percent.
CEO Sanjeev Mohanty had also mentioned that $66 Million worth of GMV was achieved in January alone, thus encouraging the company to set a daunting, $1 Billion GMV target. He also talked about achieveong a possible breakeven. The company had an extremely impressive 98% growth in the 2014-2015 period and its losses had shrunk to almost 40% lesser than rivals.
All these combined, could be the reason for an extra cash injection so as to help the company achieve breakeven and ultimately become self-sustainable.
But the other side of this cash infusion, could be the fact that GFG is only putting in cash to make up for that big warehouse loss Jabong incurred recently. CMO Saurabh Srivastava’s surprise exit also hints towards not-so-good company operations.