India’s largest e-commerce player Flipkart may have pushed its IPO plans further than it had previously planned even as its latest round of sale, Big Billion Days, is off to a steady start.

During the latest round of funding in August, the e-tailer had received $2.5 billion from SoftBank Vision Group, which involved direct investments in the company as well as purchase of stake from existing investors.

Flipkart has also raised about ₹1,000 crore as loan from Axis Bank ahead of its biggest sale of the year. The e-commerce player has so far raised about $6 billion from venture funds. A questionnaire sent to Flipkart about its IPO plans remained unanswered. The Bengaluru-based company, started by IITians Sachin Bansaland Binny Bansal, was valued at $11.5 billion in early April after it raised $1.4 billion from eBay, Tencent and Microsoft.

The IPO plans were in the offing late last year after Flipkart was struggling to raise funds even as its valuation had dipped to about $6 billion. At that time, sources in the company had said that the Bansals had been assigned the task of readying Flipkart for an IPO within 18 months. Since then, Flipkart has received a new lease of life with the SoftBank Vision Group pumping in funds as well as a credit line from a few India-based banks, including Kotak Mahindra Bank and HDFC Bank.

Flush with funds “The company is on a steady wicket as far as funding is concerned and may not need additional funds for another 12-18 months now,” sources inside the company said. There is a possibility that the IPO may eventually happen so that some of the existing investors are able to check out of the company with a heftier valuation of their stocks. But with Flipkart flush with funds as of now, it may not happen any time soon.

Flipkart’s ability to raise loans from Indian banks at a time when most of them are facing huge NPA pile-ups gives a clear indication of the health of the company.

Flipkart has flipped back to splurging big time this festival season in an all-out effort to wrest market share. This, after an 18-month period of cost cutting, slashing cash burn by half and laying off a sizeable chunk of its employees, as it eyed a path to profitability while it struggled to raise funds.

Cash burn While rival Amazon typically outspends Flipkart by 60-70 per cent, the ongoing annual sale will see both Amazon and Flipkart incurring the same levels of cash burn as they dole out deep discounted deals of 50-80 per cent, and up to 90 per cent in some categories, say analysts.

While both e-tailers have notched up impressive exclusive partnerships with smartphone and large appliance brands, which will beef up the GMV (gross merchandise volume), this time around, the battle for supremacy will also be fought in the higher-margin yielding fashion category.

“The cash burn is usually 15 per cent of the GMV for the e-commerce industry on an annualised basis. However, it will rise much higher to 20 per cent with total cash burn at ₹2,000 crore on a GMV of ₹10,000 crore, this festival season. Nearly 70 per cent of this cash burn will be incurred by Flipkart and Amazon,” said Anil Kumar, CEO of RedSeer Consulting.

Last year, although rival Amazon spent three times more on its marketing campaign on the Diwali sale, according to a RedSeer survey, Flipkart — which had not launched a TV campaign for lack of funds — still garnered top-of-the-mind recall with its digital and newspaper ads, post the sale last year.

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