Flipkart India Pvt. Ltd., the wholesale arm of the Walmart-owned e-commerce marketplace in India, has received Rs 1,431 crore in fresh funding from its Singapore-based parent entity Flipkart Private Limited. The investment came days after the Indian government made clarifications in the FDI policy for e-commerce that significantly affects firms like Flipkart.
According to documents filed with the Registrar of Companies (RoC), Flipkart’s parent entity was issued 4.86 lakh shares in Flipkart India on January 7 at a price of Rs 29,400 per share. The documents, which were reviewed by the Economic Times, were sourced from business signals platform paper.vc.
Flipkart India Pvt. Ltd. purchases goods in bulk from manufacturers and sells them to preferred sellers, usually ones in which it or another group company has some equity participation. It’s a model that’s also followed by rival Amazon, and is one which has recently come under fire from offline retailers and the government.
On December 26, the Department of Industrial Policy and Promotion (DIPP), issued a clarification for the FDI policy for e-commerce, disallowing players such as Amazon and Flipkart from selling products from vendors in which they directly or indirectly have any stake. The marketplaces have until February 1 to comply with the new rules, for which they’ve sought an extension.
Flipkart had invested Rs 2190 crore in Flipkart India Pvt. Ltd. in December last year, making the new investment highly unusual as the company has previously spaced out its fund infusions in its Indian subsidiaries. Together, the two investments bring the total investment in Flipkart India Pvt. Ltd. to over Rs 3,600 crore, or approximately half a billion dollars.
The investment will be the third large fund infusion into Flipkart after Walmart closed to deal to acquire 77 per cent stake in the homegrown etailer for $16 billion in August last year. Flipkart Internet Pvt. Ltd., the marketplace entity of the company had received over Rs 3,400 crore in September last year, ahead of its massive BigBillionDays festive sale.
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