Flipkart deal may hit Walmart profits
Walmart Inc., which spent $16 billion to buy a 77% stake in Flipkart earlier this year, cut its earnings forecast for this year because of losses expected at Flipkart, highlighting the challenges that the US retail giant faces in making the expensive acquisition work in the longterm.
On Tuesday, Walmart lowered its earnings forecast for the current financial year, after including the impact from the Flipkart acquisition. Walmart also predicted that its US e-commerce growth next year will be slower than the current financial year.
Walmart faces the prospect of a long-drawn-out battle against Amazon India, which closed the gap with its rival during the first leg of the Diwali season face-off last week.
Flipkart, which had set aggressive targets to more than double its gross sales during its flagship five-day Big Billion Days sale, ended up falling short of that target.
According to a company spokesperson, the company grew sales during Big Billion Days by 80% from last year. Mint could not immediately verify the sales that Flipkart posted during Big Billion Days, but according to reports, Flipkart posted a little over $1 billion in gross sales during the five-day event.
Mint had reported on August 17 that Flipkart is targeting sales of $1.5-1.7 billion in its annual Big Billion Days sale, nearly double of what it did last year, three people aware of the online retailer’s plans said.
Mint also reported on Tuesday that Amazon India registered its best-ever performance in festive sales, which is usually dominated by Flipkart’s flagship Big Billion Days sale.
Amazon closed the gap with Flipkart during this year’s Great Indian Festival, driven by strong sales of smartphones and more significantly, exceeded its internal sales targets for its Great Indian Festival sale.
On Tuesday, Walmart said it expected its operating income during 2019-2020 to decline by a low single digit percentage range, but added that it expected operating income to increase by a low single digit percentage range, when excluding Flipkart in both FY19 and FY20.
ArcelorMittal will pay ₹7,469 crore to the financial creditors of Uttam Galva and KSS Petron to become eligible to bid for bankrupt Essar Steel India Ltd.
The announcement on Wednesday by the steelmaker comes days before the Supreme Court-set deadline—which expires this weekend—to comply with its eligibility requirement.
“ArcelorMittal announces that in-line with the Indian Supreme Court ruling dated 4 October, 2018, it has approved a payment of ₹7,469 crore (approximately $1 billion) to the financial creditors of Uttam Galva and KSS Petron to clear overdue debts in order that the offer it submitted for Essar Steel India Ltd (ESIL) on April 2, 2018, is eligible and can be considered by ESIL’s Committee of Creditors,” the company said.
On October 17, Mint reported that ArcelorMittal had admitted to a liability of ₹4,554 crore to bankers, far below the ₹7,469 crore it has now agreed to pay. The report had discussed how the outstanding dues of both firms, where LN Mittal had, until recently, been listed as a promoter, had both been declared non-performing assets with outstanding debt of ₹5,654 crore (Uttam Galva) and ₹904 crore (for KSS Petron).
On October 4, SC had granted one final opportunity to ArcelorMittal and Numetal—the two front-runners with bids for Essar Steel—to settle outstanding dues in related firms and submit fresh bids for the stressed asset by the end of this week.
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