Flipkart’s B2B Arm Continues To Bleed, Loss Widens About 1.4X To INR 3,404.4 Cr

Flipkart India, the B2B arm of Walmart-owned Indian ecommerce giant Flipkart, reported widening of its loss to INR 3,404.4 Cr in the financial year 2021-22 (FY22) from INR 2,444.8 Cr in the previous fiscal year.

Flipkart’s B2B arm, which sells goods to online sellers for them to sell the products through Flipkart’s online marketplace Flipkart Internet, saw its operating revenue rise 18.7% to INR 50,992.5 Cr in the reported period from INR 42,941.7 in FY21. 

Flipkart India earns the largest portion of its revenue from sale of goods, transaction fees paid by its vendors in the marketplace, and its logistics services.

The company’s total revenue in FY22 stood at INR 51,175.7 as against INR 43,349.1 in FY21.

It must be noted that despite the widening loss, Flipkart’s Singapore-based parent entity invested $233 Mn (INR 1,736 Cr) in Flipkart India earlier this year. 

Meanwhile, Flipkart India’s total expenses jumped over 19% year-on-year (YoY) to INR 54,580 Cr in FY22, largely driven by increase in spending on purchase of finished goods. In FY21, the company’s total expenses stood at INR 45,793.9 Cr.

Flipkart India spent INR 53,878.6 Cr to purchase goods for reselling in FY22 as against INR 47,629.9 Cr in FY21. Its inventories of finished goods, work-in-progress and stock-in-trade was also higher during the period.

Meanwhile, employee benefit expenses grew over 1.6X YoY to INR 627.4 Cr as spending on salaries and wages grew to INR 345.6 Cr during the period from INR 217.8 Cr in FY21.

On the other hand, the company’s warehousing costs also more than doubled to INR 288.1 Cr in FY22 from INR 139 reported in the prior fiscal year.

The increase in expenses and widening of loss are not exclusive to Flipkart’s B2B arm. Its ecommerce entity Flipkart Internet also reported a 1.5X increase in its net loss to INR 4,361 Cr in FY22 despite a 33% jump in operating revenue. Its total expenses also increased by 36.5% to INR 15,020.8 Cr in the same period.

Walmart India, the Indian entity of US retail giant Walmart, which operates 29 Flipkart Wholesale’s Best Price stores in India, also reported a 50% rise in loss to INR 299.01 Cr in FY22 as against INR 200.8 Cr in FY21 due to growing inventory costs.

In its quarterly report in July, Walmart spoke about a high cash burn in Flipkart. Flipkart burnt $1.1 Bn in cash between February and July 2022.

Flipkart India’s cash and cash equivalents at the end of March 2022 stood at INR 3.9 Cr as against INR 76.7 Cr in March end last year.

Meanwhile, Walmart is again planning to raise about $3 Mn to fuel new investment in Flipkart.