Amazon’s India arm is probably getting more money soon. The first signs of that fresh burst of capital came in as the company doubled its authorized capital to around ₹16,000 crore.
According to various news sources, this new authorized capital has even exceeded the $2 billion which Jeff Bezos had committed to invest in Indian operations. This clearly indicates that Amazon is ready to infuse as much cash as possible, to be at the pole position in India.
Amazon India has increased its authorized capital from Rs.8,500 crore in February, documents with the Registrar of Companies (ROC) show.
The firm’s authorized capital was Rs.1,500 crore in July 2014, when Amazon’s chief executive officer Jeff Bezos promised it will invest as much as $2 billion in India over the next few years.
After $2 billion capital commitment from the company’s founder, Amazon Seller Services has already received around Rs.10,730 crore in multiple tranches.
The amount is being used by the company on discounts, advertising, hiring, etc., as per the documents with the RoC. This is apart from the company’s cash infusions in its logistics unit Amazon Transportation Services Pvt. Ltd and Cloudtail India Pvt. Ltd, which is the company’s joint venture with Catamaran Ventures.
Amazon India is stepping up its pace of investment to try and overtake local rivals Flipkart Ltd and Snapdeal (Jasper Infotech Pvt.Ltd), both of which are struggling to raise money.
Last week, India permitted 100% foreign direct investment in online retail of goods and services under the so-called “marketplace model”, legitimizing existing businesses of e-commerce companies such as Amazon and Flipkart. It also notified new rules which could potentially end discount wars between these companies.
Amazon is also expanding into other businesses. Amazon India recently launched grocery deliveries in Bengaluru through a dedicated app called Amazon Now, which promises to deliver household products in less than two hours.
But, during the same time period, Flipkart shut down its groceries delivery app Nearby as it failed to generate enough interest among shoppers. It was also launched in Bangalore region as a pilot project.
Amazon is desperate to succeed in India, the last big e-commerce market in the world, after losing out in China to Alibaba Group Holding Ltd.
According to a UBS report ,India’s e-commerce sales could reach $48-60 billion by 2020 from $4.47 billion in 2014.
Amazon India is led by veteran Amit Agarwal, Amazon India launched only in June 2013 and successfully wooed tens of millions of Indian shoppers with low prices, wide product selection and fast delivery.
According to Live Mint ,The pace at which Amazon has caught up with Flipkart and Snapdeal, which launched several years before their American rival, has surprised experts and investors.
What's your opinion about Amazon India's this double authorized capitalisation?
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