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Walmart may pump $1.2 billion into Flipkart's operations

This move by Walmart is likely to give an impetus to Flipkart in the face of cut-throat competition from the likes of Amazon at home.

twitter-logo BusinessToday.In        Last Updated: June 14, 2019  | 13:45 IST
Walmart may pump $1.2 billion into Flipkart's operations
Walmart is planning to use its cash reserves worth $1.2 billion lying outside the US for funding Flipkart's operations.

Walmart is planning to use its cash reserves worth $1.2 billion lying outside the US for funding Flipkart's operations. This move is likely to give an impetus to the Indian e-commerce major in the face of cut-throat competition from the likes of Amazon at home.

"As of April 30, 2019 and January 31, 2019, cash and cash equivalents of $2.7 billion and $2.8 billion, respectively, may not be freely transferable to the US due to local laws or other restrictions," the US e-commerce giant said in a regulatory filing. "Of the $2.7 billion at April 30, 2019, approximately $1.2 billion can only be accessed through dividends or inter-company financing arrangements subject to approval by Flipkart minority shareholders. However, this cash is expected to be utilised to fund the operations of Flipkart," the filing as seen by the Business Standard stated.

Also Read: Flipkart cuts commissions, shipping fee to boost seller numbers; rates to be effective from June 24

This investment commitment comes after Walmart President and CEO Doug McMillon and Judith McKenna, President & CEO, Walmart International visited India in April-May this year. Both the heads reportedly evaluated Flipkart's progress as well as finalised the strategy to counter Amazon in India.

Jeff Bezos led ecommerce giant recently made a fresh investment of Rs 2,800 crore in its India unit, Amazon Seller Services. This reportedly takes the total funding received from the US-based parent to around Rs 30,090 crore, closer to the $5 billion (over Rs 35,000 crore) kitty that Bezos had committed for the Indian market in 2016.

Also Read:Walmart appoints former Google executive Suresh Kumar as chief technology officer

The fresh investment will beef up Amazon's war-chest to take on Flipkart, which was acquired by Walmart last year. Significantly, the latest infusion is also the first one since Amazon's April announcement about shutting down its Chinese marketplace by mid-July.

Walmart in May 2018, had announced that it is buying 77 per cent stake in Flipkart for about Rs 1.05 lakh crore, a deal which gave the US retailer access to Indian e-commerce market that is estimated to grow to $200 billion within a decade.

Also Read: Amazon, Walmart's Flipkart may avoid key queries in CCI study to protect trade secrets

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