Binny Bansal clarifies Walmart did not overpay for Flipkart; US retail giant made a long-term bet on India

Binny Bansal, Group CEO of Flipkart, is of the view that US retail giant Walmart made a bargain buy in acquiring home-grown giant Flipkart at $16 billion in mid-August.

Refuting the claims in media reports that Walmart overpaid for Flipkart, Bansal, in an interview with San Francisco-based news website Recode, said that the US retail giant had made a long-term bet on India that would pay off over the next five to ten years, Mint reported.

Talking about Flipkart's plan to go public in the near future, Bansal said, “We believe we can be way more competitive with the right partners around. The other partner we have is Tencent, we also have Microsoft as an investor. Bringing the right partners on board is crucial, we believe, for success in the future,” he added at the Recode’s Code Commerce conference at Industria in New York City on Monday.

 Binny Bansal clarifies Walmart did not overpay for Flipkart; US retail giant made a long-term bet on India

A file photo of Binny Bansal. Reuters

Talking about Flipkart's logistics capabilities, Bansal said that the homegrown e-commerce company reaches 400 cities and 90 percent of deliveries are done by its own network. “From a logistics perspective, the kind of reach we have in the country, especially in tier 2, tier 3 areas, is unparalleled,” he was quoted as saying by Recode.

Meanwhile, Flipkart Internet, the online marketplace arm of the Walmart-backed company, has received over Rs 3,462-crore fund infusion from Flipkart Marketplace, Singapore, as per regulatory documents.

The fund infusion -- done in two tranches -- will provide more ammunition to Flipkart, which is locked in an intense battle with US-based Amazon for leadership in the burgeoning Indian e-commerce market.

" accordance with the Letter of Offer dated 14 August, 2018 circulated by the company for the rights issue of shares, the board of directors of the company be and hereby allot 14,57,598 Class A equity shares...for an amount aggregating to Rs 30,07,02,46,740 for cash to Flipkart Marketplace Private Ltd, Singapore," regulatory documents filed with Corporate Affairs Ministry said.

The resolution was passed at the board meeting held on 30 August, 2018.

The board, during the same meeting, also passed another resolution (in accordance to a Letter of Offer dated 18 July) for allotting 2,21,002 equity shares for Rs 455.92 crore for cash to Flipkart Marketplace, Singapore.

The fresh capital also comes close on the heels of festive sale season that not only brings in discounts and deals for customers, but is also an annual showdown of sorts between the two largest players in the segment -- Flipkart and Amazon India.

Market watchers expect the competition between the two to be even fiercer this year as both companies have invested significantly through the year to ramp up product offerings as well as logistics infrastructure to ensure speedier delivery.

While Flipkart now has the backing of US retail giant Walmart (via a $16 billion deal signed earlier this year), Amazon India too has received millions of dollar in funding through the year from the US parent across operations like marketplace and payments business.

About 20 million people are expected to shop on various e-commerce platforms during the festive sale next month, translating into sales of around $3 billion for players like Amazon and Flipkart, according to a report by research firm RedSeer.

In a statement Tuesday, Flipkart said it expects to see a surge of 8-10x in sale of perfumes on its platform during the sale season. This growth, it said, would be on the back of an overhaul undertaken by the company.

"Project 'Authenticated' promises a revamp of Flipkart's portfolio comprising over 2000 perfumes and a seal of authenticity on the listing image, a new feature that showcases brand-approved sellers," it said.

The company will also add more exclusive partnerships and expand its collection of globally recognised labels in coming months, it added.

The size of the perfume industry as a whole is predicted to grow 50 percent to Rs 3,000 crores over the next five years, the statement said.

With inputs from PTI

Updated Date: Sep 19, 2018 14:02:34 IST