Ecommerce major Flipkart, on Thursday, announced a proposed acquisition of online travel aggregator Cleartrip. Flipkart will acquire 100% of Cleartrip’s shareholding, but the latter will continue to operate as a separate brand retaining all employees while working closely with
Flipkart to further develop technology solutions to make travel simple for customers.
The amount of the acquisition hasn’t been disclosed, but reports this week suggested the deal will value the OTA at around $40 Mn. Reports had suggested that the acquisition by Flipkart would be a distress sale for the 15-year-old travel portal, considering the downturn in the travel and hospitality industry amid the Covid-19 pandemic.
“Cleartrip is synonymous with travel for many customers, and as we diversify and look at new areas of growth, this investment will help strengthen our wide range of offerings for customers,” said Kalyan Krishnamurthy, CEO at Flipkart Group.
Founded in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton, to date, Cleartrip has raised $56.4 Mn in six funding rounds from six investors. The company last raised funds in a venture round in January 2019.
The travel business has been on a recovery trajectory since lockdown restrictions were lifted last year. In December 2020, ixigo cofounder Aloke Bajpai told Inc42 that the number of flyers has been increasing since July and Ixigo has seen up to 55% pre-Covid demand back in flight bookings.
However, as Covid-19 infections spread rapidly again across the country, several states have begun imposing lockdown and night curfew restrictions, plunging the travel and hospitality segment into further uncertainty. Further, international travel restrictions continue to hamper revenues.
Add to that the fact that Cleartrip did not perform very well in the year preceding the pandemic. In FY20, Cleartrip reported a 2.5% year-on-year drop in revenue at INR 318.8 Cr for the year ended March 31, 2020. The company’s operating income of INR 273.5 Cr fell by a drastic 10% in the fiscal, ahead of the lockdown which severely impacted the operations since April 2020. Cleartrip’s expenses dropped 6.8% to INR 333.2 Cr, whereas its loss was cut in half to INR 14 Cr.