News Roundup: Even Before Covid, India’s Ecommerce Giants Were In The Red & More

The week that’s gone by saw Inc42 report on the financials for some of India’s major ecommerce startups. And while several of them have turned in a good performance for the fiscal year ending March 31, 2020, with their revenues increasing and losses coming down, the fact that they were in the red at the start of the current fiscal year couldn’t bode well for their growth trajectories. This is because the effects of the Covid-19 pandemic and the resultant lockdown began to be felt across sectors from late-March when India went into lockdown. Ecommerce businesses were majorly affected, something that’s bound to be reflected in the FY21 financials. 

Flipkart-owned fashion etailer Myntra saw its losses come down 25% year-on-year (YoY) to INR 874 Cr. However, the decline in losses is not due to an increase in revenue. In fact, Myntra’s revenue for the period also fell 6% YoY and stood at INR 4,262 Cr in FY20. 

Meanwhile, Flipkart India Private Limited reported a 12% growth in its revenue, which stood at INR 34,610 Cr and at the same time cut its losses by 18% to INR 3,150 Cr. The company, which is planning its initial public offering (IPO) next year, would only be able to do so overseas as has been reported, because of India’s profitability criteria for public listing. 

A similar story is there to tell for kids and infant-focussed ecommerce startup FirstCry, which has cut its losses by 83%, from INR 933 Cr in FY19 to INR 191 Cr in FY20. The encouraging sign for FirstCry, which also entered the unicorn club this year, is that the decline in losses has come due to a 68% increase in revenue, from INR 535 Cr in FY19 to INR 897 Cr in FY20. However, as with the filings for Myntra, FirstCry’s filings with the Ministry of Corporate Affairs (MCA) note that the pandemic caused the closure of business for some period of time, which would likely reflect in the company’s financials for the current fiscal year (FY21). 

For Snapdeal, while revenue hovered around the same mark as in FY19, declining just 1% to INR 916 Cr in FY20, the company’s losses increased 47% from INR 186 Cr in FY19 to INR 274 Cr in FY20. Although, Snapdeal’s filings state that the company has made continued investments in video, vernacular and other strategic projects aimed at growing the online market amongst new users. 

Used cars marketplace Cars24, which recently entered the unicorn club, nearly doubled its revenue in FY20. The Gurugram-based company recorded consolidated revenue of INR 3,056 Cr in the fiscal year ending March, compared to INR 1,687 Cr recorded in the previous year. 

The company was also able to cut down its net loss 12% from INR 325.6 Cr to INR 284.9 Cr in FY20. 

And while one would expect the company to witness a fall in traction due to the pandemic, the company has claimed to have witnessed an uptick in sales amid the pandemic. With annual transactions exceeding 2,00,000 units and 4x increase in website engagement, the company claims to have surpassed pre-Covid levels in the third quarter of 2020. 

It is worth noting that despite 2020 being the pandemic year, ecommerce majors such as Amazon and Flipkart, among others, witnessed a bumper festive season from October-November. According to a report by consulting firm RedSeer, India’s online festive sale during October-November raked in $8.3 Bn in gross sales, a spike of 65% YoY. 

Industry analysts have attributed this to pent-up demand from the period when online deliveries of non-essential items were not allowed during the lockdown. The fact that people have been wary of visiting brick and mortar stores because of the fear of infection also had a role to play. It remains to be seen if this shift in consumer preferences can help ecommerce majors turn in better revenue figures and a further decline in losses in FY21. 

Other News

• Ride-hailing major Ola, which owns Ola Electric, is reportedly scouting for sites in India and Europe, where it can build a network of charging stations for electric two-wheelers, which it will soon launch in the market. 
• The Delhi High Court, on Monday (December 21), refused to restrain Amazon India from writing to authorities to state its case in the proposed deal for the sale of Future Group’s retail, wholesale, logistics and warehousing businesses to Reliance Retail. Amazon India has been permitted to write to statutory authorities such as the Securities and Exchange Board of India (SEBI) or others in the matter.  
• Despite the violence at the Wistron factory in Bengaluru apparently hurting Apple’s ambitious ‘Make In India’ plans, the US tech giant is in no mood to make changes in manufacturing plans of Apple products like iPads, MacBooks and other devices in India. The company is reportedly planning to locally source the components required for the manufacturing of iPhones as it brings in more partners to start the domestic production of its products in the country.
• With the Covid-19 pandemic compelling people to stay at home and work remotely, a report revealed that Indians’ average use of smartphones is estimated to have gone up 25% to almost 7 hours a day since April this year.
• The return of PUBG Mobile appears nowhere in sight after the IT ministry clarified in its response to an RTI (right to information) request that the Indian government hasn’t given permission to PUBG Corporation — the video game’s South Korea-based parent entity — to relaunch the popular battle royale esports title’s mobile version in the country. However, it seems the ban never dented the euphoria for the game among esports enthusiasts, who soon adapted to the situation and exploited loopholes in the government’s directive to return to the battleground. Several PUBG streamers in the country have resorted to downloading the APK file for PUBG Mobile’s Korea (KR) version from TapTap, a mobile game sharing community. Read the full story here.

From the funding and acquisitions corner, about $385 Mn was invested across 20 Indian startups this week, and one company was acquired.

Among the movers and shakers this week, Livspace has roped in Saurabh Agarwal as their chief financial officer. 

We will be back with next week’s News Roundup.