Billion dollar baby: Flipkart raises Rs 6,000 cr for war chest as it expands

In the biggest fund raising ever by an Indian e-commerce site, Flipkart has reportedly raised $1 billion (approximately Rs 6000 crore), effectively having raised a total of $1.7 billion with the company being valued at over $5 billion.

The Economic Times in an exclusive report today said the e-commerce site has raised half the amount from existing investors like Tiger Global, DST and Accel Partners and the rest will come from other investors. Potential investors include Singapore’s sovereign wealth fund GIC and US-based investment firm T Rowe Price.

The report said the company is reportedly set to make the announcement about its fund raising in the next couple of weeks.

In an interview to The Hindu BusinessLine, co-founder and CEO of Flipkart Sachin Bansal made it clear that the company wasn’t even looking at profitability at present and is looking to widen its reach across the country.

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"…Profitability is definitely not in our top three metrics.Our top three metrics are customers, reach and overall retail space," Bansal told the newspaper.

Bansal said that in terms of competition the Indian markets was not comparable to China or US and believes that the company will grow with the market.

Flipkart, and other Indian e-commerce sites, have been raising funds aggressively as they attempt to gain market share against international competitors like Amazon in the rapidly growing Indian e-commerce space.

According to a Technopak report, Indian e-commerce has attracted a total funding of $1.6 billion across over 140 deals since 2012.

As of May 2014, the sector witnessed 20 deals worth $637 million compared to 60 deals worth $592 million in the entire 2013. In 2012, the sector saw investors pouring in $371 million for a total of 73 deals.

In May, Snapdeal said it has raised $100 million (about Rs 590 crore) in a new round of funding from Temasek, BlackRock Inc, Myriad, Premji Invest and Tybourne.During the same month, Flipkart announced it had raised $210 million in a fresh round of funding, bringing the private equity firm DST Global on board as an investor.

The Technopak report said although Indian online retail (e-tailing) market is still a small contributor to retail, accounting for only 0.4 percent of the overall market, it is on a rapid growth trajectory.The $2.3 billion e-tailing market in 2014 is expected to reach 3 percent of Indian retail ($32 billion by 2020).

With a team strength of 13,000, Flipkart has 18 million registered users and 3.5 million daily visit. With technology support, it is able to transact 5 million shipments per month.

Analysts believe that the Indian e-commerce space is not going to become an exclusive Amazon vs Flipkart saga. The size and breadth of consumer demands will facilitate the growth of several small, successful e-tailing sites but while in the initial phases investor bet on a large number of players that were small in size they have got more selective as leaders have emerged in the market.

Raising funds would help Flipkart build a war chest to expand and acquire market share in the face of competition from rivals like Amazon, who have deep pockets, and stabilise its position before potential rivals like US retailer Wal-Mart and other international e-tailers enter the market.