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

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

Flipkart had $1 billion in cash in July 2021, which came down to $900 million by September 2022.

The company, in July 2021, raised $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 $1.1 billion as of July 31, 2022.

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

"Of the $3.5 billion on July 31, 2022, approximately $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.

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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 2,00,000 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 $3.6 billion. In August 2021, the firm invested $1.42 billion in various arms just ahead of the festive season.

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

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

"Of the $5.5 billion at October 31, 2021, approximately $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 $600 million in inorganic growth with investments in companies like Ninjacart and ANS Commerce in December 2021. There was an investment of $300 million in Flipkart India and $70 million in Ekart, which left Flipkart with a cash balance of $2.2 billion in January 2022, as per data based on the regulatory filing.

Flipkart Group Singapore entity Flipkart Private Limited invested about Rs 1,590 crore, about $200 million at the present exchange rate, 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 about $900 million.

However, Flipkart spokesperson has contested the investment as reduction in cash balance.

"We can confirm that the numbers used as the cash balance of the Flipkart Group for the month ending September 2022 are speculative and inaccurate," the spokesperson said.