‘We want mobiles, large appliances and fashion to become cash flow positive in 1224 months’
It’s been an eventful start to the year for Flipkart Ltd. In January, India’s most valuable Internet startup named a new chief executive, replacing co-founder Binny Bansal with Kalyan Krishnamurthy, a representative of Flipkart’s largest investor Tiger Global Management. This week, it secured $1.4 billion in fresh capital from three technology companies, Tencent, eBay and Microsoft and agreed to buy eBay’s small India business. Flipkart is also in talks to buy smaller rival Snapdeal. In an interview, Binny Bansal, Flipkart Group CEO, talks about how the company will use funds and on the perception that Flipkart is an investor-run company. Edited excerpts:
Flipkart has raised nearly $5 billion. What’s the timeline for an initial public offering (IPO) and how much pressure is there from investors?
There’s no specific plan. With the fund-raise we are quite well-capitalised and all existing and new investors are equally excited about building a very large e-commerce business and really making good the huge opportunity we have of taking the 2% e-commerce penetration to 20% over the next 10 years.
Is there a chance you will raise more cash after this?
We don’t have any specific plans. The next 2-3 years will be focused on executing on the agenda of the growth portfolio, profitability and the growth agenda on the new portfolio.
Is the current round still open for new investors?
As is the case in general, we keep talking to investors. There continues to be a very strong investor interest, especially now. We’ll continue to selectively assess all the options.
Are you in talks or have you held talks to buy Snapdeal?
We’re not commenting. There’s this perception that Flipkart has become a company that is run by Tiger. At Snadpeal, investors have taken control of matters. What do you make of this situation where two of India’s top startups are being controlled by investors? We focus on our customers and what they need and on our strategy; that is what keeps us going. I can’t speak for the other companies or the ecosystem. I can only speak for Flipkart. We’ve come a long way over the past 10 years by really focusing on customers and really building great talent. We want to continue to do the same over the next 10 years.
Any timeline on profitability?
I think we are looking at a different view on that. We definitely want large parts of our portfolio – mobiles, large appliances and fashion -- to become cash flow positive in the next 12-24 months. Mobile phones is a very competitive and lowmargin category and it accounts for a disproportionate part of your business. How can you cut burn rates when you’re so reliant on this category? Other categories are growing faster than mobiles. So over the next two to three years, we see mobiles being a much smaller part of the portfolio. For today, fashion, large appliances and mobiles are the main categories.
Two years from now, we want furniture and groceries to also become core categories.