E-commerce giant, Flipkart Internet—the online unit, reported a 20 per cent increase in its losses. The amount sums at Rs 1,624 crores for the current year ending on March 31, 2019. Last year, the company was able to cut its losses at just 30 per cent.
This year the unit saw a steep increase in operating revenues by 51 per cent to Rs 4,34 crores during FY19 as compared to FY18. In August 2018 US-based giant retail, Walmart had acquired 77 per cent of the company’s shares for a whopping $16 billion.
The increase in the expenses signals company’s expansion under its new owner, Walmart. Under this plan has doubled its expense on employees and is spending huge sums on advertising besides legal costs.
As per the reports filed by the Economic Times, the company stated it aimed to seek revenue growth and minimizing losses incurred because of credit risk exposure. “The company trades only with recognised and credit-worthy third-parties,” the report read.
The report further revealed that marketplace services was the primary revenue-generating option for Flipkart Internet at Rs 1,983 crores. Other than that, the e-commerce giant spends Rs 996 crore on logistics charges while advertising costs doubled to Rs 1,983 crore.
The company’s expense on employee cost including both, salaried and ESOPs climbed to 91 per cent at Rs 1,889 crore. It’s advertising also rose to 56 per cent to Rs 1,141 crore and legal expense went up by 68 per cent to Rs 377 crore.
Recently, the company announced its another branch, FarmerMart under which the company expects to lose worth Rs 70.71 billion for 2019. Under FarmerMart, Flipkart is planning to sell grocery items that will feature locally-produced and packaged food products.
(With input from agencies)