Flipkart's logistics arm Ekart suffers massive Rs 810-crore loss

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With competition from Amazon, its value erode, making it harder to raise funds at new valuation

Karan Choudhury  |  New Delhi 

Flipkart’s supply chain and logistics arm Instakart Services or Logistics has incurred losses of Rs 810 crore on a revenue of Rs 303 crore in the nine months to March, its first year of operation, after the Indian e-commerce major spun it off as a separate unit, people familiar with the development said.

The logistics arm losses come over and above the Rs 2,850 crore losses its two entities — India and Internet —showed for FY16. Logistics was incorporated in June 2015.

is trying to add more third party clients to increase its revenues. did not respond to the questionnaire or repeated calls made to its team.

“The company is talking to a lot of third party clients. In 2017, their main aim is to make it sustainable. Right now, it is eating into Flipkart’s revenues. A lot of internal fine-tuning is happening at the moment. The company plans to generate at least 50 per cent of the business from external clients in the next two years. Right now, it is just around 10 per cent,” said a company source, withholding identity.

According to numbers sourced from data platform Tofler, the two entities – India and Internet – together earned roughly Rs 15,129 crore ($2.2 billion) in 2015-16, compared to Rs 10,390 crore in FY15. The for the two entities mounted to around Rs 2,850 crore, compared to around Rs 2, 000 crore a year earlier.

India is the wholesale cash-and-carry entity, while the other company is an e-commerce marketplace, which books commissions on each sale.

already works with firms such as and offline players like Madura Garments and Apollo Hospitals. It has also branched out with its courier service to individual users. Co-Founder and Chief Executive Officer Binny Bansal is betting on logistics investments to expand into newer areas and offset losses of the e-commerce arm. It had invested in MapmyIndia for digital maps to optimise best routes for its vehicle fleet and deliver goods to smaller towns and villages.

has e-tailers like Shopclues and and does daily shipments of around 30,000-40,000. has set up a complex holding structure, with several entities listed in Singapore, making it hard to ascertain the exact revenue and figures.

Despite hefty growth in revenues in the previous financial year, continued to punish Flipkart’s valuation. After a series of markdowns by investors, set a valuation of just $5.58 billion for the three months that ended September. had enjoyed a peak valuation of $15.2 billion, making it among the top valued start-ups in the world.

With increasing competition from rival and an inability to curb losses, has seen its value erode, making it harder for the company to raise fresh funds at a valuation it wants. Large such as – Amazon’s arch nemesis in the US – are said to have walked away from investing in the company, after being unable to settle on a price agreed upon by both parties.

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