Flipkart burns over $3.7 billion cash in about a year till September 2022

E-commerce major Flipkart has burnt cash of USD 3.7 billion (about Rs 30,000 crore) in about a year ending September 2022, according to regulatory filings.

Flipkart had USD 1 billion in cash in July 2021, which came down to USD 887 million by September 2022.

The company, in July 2021, raised USD 3.6 billion (about Rs 29,000 crore), which has been completely exhausted, according to regulatory filings of Flipkart and Walmart.

It is the biggest cash burn in a year by any new-age company in the country, according to industry estimates.

A Walmart regulatory filing shows that the company had approximately USD 1.1 billion as of July 31, 2022.

“As of July 31, 2022, and January 31, 2022, cash and cash equivalents of USD 3.5 billion and USD 4.3 billion, respectively, may not be freely transferable to the US due to local laws or other restrictions.

“Of the USD 3.5 billion on July 31, 2022, approximately USD 1.1 billion can only be accessed through dividends or intercompany financing arrangements subject to the approval of the Flipkart minority shareholders; however, this cash is expected to be utilised by Flipkart,” the filing said.

When contacted, a Flipkart spokesperson said, “It is important to understand the numbers in the right context, especially given the many investments that Flipkart has made in the last year.

“These include investing in or launching new businesses such as Shopsy, Flipkart Health+, Cleartrip, and ANS Commerce; strengthening our deep and expansive supply chain that generates more than 200,000 employment opportunities; building strong technology capabilities such as image search, a revamped UX interface, live commerce and more.”

“By investing in these areas, we are able to create new employment opportunities, and grow the e-commerce ecosystem in India, which in turn provides more opportunities for growth for more than 11 lakh sellers, including MSMEs and deeper value to customers,” the spokesperson added.

In July 2021, Flipkart announced raising USD 3.6 billion. In August 2021, the firm invested USD 1.42 billion in various arms just ahead of the festive season.

According to a filing to the Registrar of Companies, Flipkart infused USD 589 million in Flipkart India Private Limited, USD 353 million in the business-to-consumer unit Flipkart Internet Private Limited, USD 412 million in Instakart, which holds the logistics EKart business of Flipkart, and USD 66 million in Myntra Designs and Myntra Jabong India.

The residual amount of USD 2.8 billion after investments made in these entities was reflected in Walmart’s filing for the October 2021 quarter.

“Of the USD 5.5 billion at October 31, 2021, approximately USD 2.8 billion can only be accessed through dividends or intercompany financing arrangements subject to the approval of the Flipkart minority shareholders; however, this cash is expected to be utilised to fund the operations of Flipkart,” the filing said.

Further, Flipkart invested USD 600 million in inorganic growth with investments in companies like Ninjacart and ANS Commerce in December 2021. There was an investment of USD 300 million in Flipkart India and USD 70 million in Ekart, which left Flipkart with a cash balance of USD 2.2 billion in January 2022, as per data based on the regulatory filing.

Flipkart invested USD 213 million in its business-to-business vertical, Flipkart India, formerly Walmart Wholesale, before the festive season sale of 2022.

This investment reduced its cash balance in September to USD 887 million. The calculation shows that the company has exhausted slightly more than USD 3.6 billion raised in July.

The losses of Flipkart widened to over Rs 7,800 crore in the financial year 2021-22 based on the performance of its business-to-business unit Flipkart India and B2C e-commerce unit Flipkart Internet.

According to a Redseer report, Flipkart Group led the first week of the festive season sale by clocking a gross merchandise value of Rs 24,800 crore or about USD 3 billion for the total estimated sale of Rs 40,000 crore across e-commerce platforms.