Ecommerce India

Flipkart Pumps in Fresh $201 Mn in its Indian Wholesale Unit

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Singapore-incorporated parent firm of e-commerce firm Flipkart, Flipkart Private Limited, has pumped in fresh capital of Rs 1,431 crore in Flipkart India Pvt. Ltd., the wholesale arm of the Walmart-owned e-commerce marketplace in India.

According to documents filed with the Registrar of Companies (RoC), Flipkart’s parent entity was issued 4.86 lakh shares in Flipkart India on January 7 at a price of Rs 29,400 per share, reported Economic Times via data accessed from paper.vc.

Flipkart had earlier invested Rs 2190 crore in Flipkart India Pvt. Ltd., in December last year, and the new infusion of funds is highly unusual as the company has previously spaced out its fund infusions in its Indian subsidiaries. Together, the two investments bring the total investment in Flipkart India Pvt. Ltd. to over Rs 3,600 crore, or approximately half a billion dollars.

Flipkart India Pvt. Ltd. purchases goods in bulk from manufacturers and sells them to preferred sellers, usually ones in which it or another group company has some equity participation. It’s a model that’s also followed by rival Amazon, and is one which has recently come under fire from offline retailers and the government.

Notably, the fresh funding of Flipkart’s India unit came days after the Indian government made clarifications in the FDI policy for e-commerce that significantly affects firms like Flipkart and Amazon.

On December 26, the Department of Industrial Policy and Promotion (DIPP), issued a clarification for the FDI policy for e-commerce, disallowing players such as Amazon and Flipkart from selling products from vendors in which they directly or indirectly have any stake. The marketplaces have until February 1 to comply with the new rules, for which they’ve sought an extension.

The investment will be the third large fund infusion into Flipkart after Walmart closed to deal to acquire 77 per cent stake in the homegrown etailer for $16 billion in August last year. Flipkart Internet Pvt. Ltd., the marketplace entity of the company had received over Rs 3,400 crore in September last year, ahead of its massive BigBillionDays festive sale.

In October, it was reported that Flipkart is said to be in talks with strategic investors to raise fresh capital for its parent. PhonePe, the payments arm of Flipkart, may also raise up to $1 billion separately in order to compete with bigger rival Paytm.

Global e-commerce giant Amazon, which completed its five years in India in July 2018, had too invested ₹2,700 crore in its India operations in August last year. Prior to which it had invested $33.58 Mn into its wallet business in India.

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Suman Chaudhary
An engineer by education and writer by profession, Suman keeps tab on startup ecosystem of India and leads the research team of IndiaWeb2 for covering funding deals, merger & acquisition and market reports.

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