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Flipkart Secures ₹450 Crores In Credit From HDFC Bank

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Looking to raise a fresh round of funding which can both power its operations and justify that $15 billion now $11 billion valuation, Flipkart meanwhile has secured ₹450 Crores in credit line from HDFC Bank, reported ET. 

According to a document uncovered from the Registrar of Companies (RoC), Flipkart India struck the deal with HDFC on February 23 and provided fixed deposits as security. The reasons for credit, however, were not mentioned in the document.

According to some bankers, companies usually borrow money on credit for carrying out their day to day operations especially when the next round of funding is delayed. And this indeed seems to be the case with Flipkart although it has declined to comment on the reports.

Flipkart, which had once experienced a crazy funding phase due to which it went on raising a total of $3.4 billion so far leading to a valuation of $15 billion- a number which seems too good to be true for many investors.

However, tides have changed for the poster boy of Indian startups with many investors becoming skeptical of its growth and future.

While some of the Indian VC firms and investors sold their stakes in the past one year, it was the recent marking down of Flipkart shares by Morgan Stanley which seems to have hit it hard bringing down its valuation to $11 billion.

The reasons for this change of scenario are many- extensively burning cash due to deep discounts, future profitability concerns, overall slowdown in investments particularly in e-commerce, intense competition from global e-commerce giant Amazon and home grown Snapdeal, and to some extent major management changes which also included a new CEO in addition to many senior positions.

Due to the above reasons, Flipkart may be finding it difficult to raise the next round of investment as it has to not only justify the over the top valuation but also assure the investors about its plans for future growth and profitability.

Meanwhile, this latest credit from HDFC would possibly help the company to ensure the smooth functioning of its daily business operations.


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