Flipkart unit’s losses rise 40% to Rs 1,624 crore

Bengaluru: Flipkart Internet, the unit which runs the online platform, reported a 40% increase in losses to Rs 1,624 crore for the
year ending March 31, 2019 after it was able to cut them by close to 30% in the previous financial year. This signals that the
company has started investing for expansion under new owner Walmart.

The unit saw operating revenues increase by 51% to Rs 4,234 crore during the year as compared to FY18, according to filings obtained from the corporate affairs ministry. US-based retail giant Walmart had acquired a 77% stake in Flipkart for $16 billion in August 2018.


After this, both the co-founders of the Indian e-tail giant — Sachin and Binny Bansal — left operating roles at the company. The costs for Flipkart primarily increased in employee expenses, which nearly doubled, even as it stepped up spending across advertising and marketing besides legal costs.

“The company’s objective is to seek continual revenue growth, while minimising losses incurred due to increased credit risk
exposure. The company trades only with recognised and credit-worthy third-parties,” said the filing.

The major contributor to Flipkart Internet’s revenues was marketplace services — commissions it charges sellers — which stood at Rs 1,983 crore. Logistics charges were Rs 996 crore, while advertising revenues doubled to Rs 576 crore.

Employee costs, including salaries and ESOPs, rose 91% to Rs 1,889 crore, while advertising & promotion expenses went up 56% to Rs 1,141 crore. Legal expenses climbed 68% to Rs 377 crore.

While announcing the Flipkart deal, Walmart had said it expects losses of $1.5 billion for 2019 at the company. Flipkart’s parent company is registered in Singapore and it operates in India through a number of units.

Its core online retail business is under Flipkart Internet, and Flipkart India, which is the wholesale unit that has been used to source exclusive merchandise. It has other units for payments, logistics and also recently set up Flipkart FarmerMart for its foray into food retail.