Flipkart’s losses, despite a decade long existence of the company fuelled largely by venture capital money, aren’t looking even close to getting low. In fact according to filings in the RoC, the company has seen almost 110 percent increase in its losses for the financial year that ended in March 2016. The company’s losses stand at Rs. 2,306 crores.
A major reason behind such increase in its loss is the fact that the company kept spending more and more to stay ahead of Amazon in the Indian market. And while losses kept mounting, sales too took a good upper curve. As per regulatory filings with Registrar of Companies, Flipkart registered Rs. 1,952 crore in sales, an increase of around 153%.
Flipkart’s holding company is registered overseas while many of its subsidiary companies are registered here in India. Same is the case with Amazon in India, whose parent company is in the US. Flipkart and Amazon both have a slew of companies registered in India for operating their online platform, logistics services, wholesale services, payments services, etc.
The commerce business of Flipkart is being handled by Flipkart Internet and Flipkart India Pvt. Ltd. Both the companies are a part of Singapore-based Flipkart Marketplace. For the financial year 2015, the combined entity of the e-commerce firm reported a loss of Rs 2,000 crore. Combined sales also trebled to Rs 10,390 crore in FY15, with Flipkart India accounting for over 90% of the sales. The numbers for the financial year ending March 2016 for Flipkart India are not yet filed.
The loss figures reported by the Bangalore-based company is the highest among other e-commerce companies in the market. While Flipkart posted a loss of Rs 2,000 crore, Amazon India reported a loss of Rs 1,723.6 crore and Snapdeal reported a loss of Rs 1,328.01 crore.
To gain lead over homegrown Flipkart, Amazon India is aggressively expanding its business in India. With no worry of capital, the company is giving tough competition to Flipkart.
Flipkart was having a rough time earlier this year, with valuation markdowns and top-level executive exit. However, it emerged as a winner during the festive season sale against its rivals Amazon and Snapdeal. While Flipkart focused on generating sales figure, Amazon India tried to get a user base of loyal customers with its Amazon Prime subscription.