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Indian investments of Japanese diversified conglomerate SoftBank are weighing down on the company’s profitability.
SoftBank, in its second-quarter results, has mentioned that the company’s loss from financial instruments at FVTPL (fair value through profit or loss) was pegged at ¥58,140 million ($558 million) during the six-month period ended September 30, as against a gain of ¥112,625 million ($1,081 million) in the year-ago period.
“This was mainly due to a loss recorded as the amount of changes in the fair value of the company’s investments in India, from March 31, 2016, till September 30, 2016,” the company said in its financial report.
It further added that about $284 million (or 29,622 Japanese Yen) of the total losses was recorded as arising from the yen’s year-on-year appreciation.
The firm said the gain or loss arising from financial instruments at FVTPL comprises mainly changes in fair value of preferred stock investment in Indian companies including taxi-aggregator Ola (ANI Technologies Pvt Ltd) and e-commerce marketplace Snapdeal (Jasper Infotech Private Limited)
Besides the above-mentioned companies, SoftBank’s other major investments, including branded-hotel aggregator OYO Rooms, ad-tech firm InMobi and real-estate portal Housing.com, are also struggling to make profits, according to sources.
SoftBank, which had been quite bullish in the Indian market for the past five years, had stepped up its investments in the country in 2014 after it appointed Indian-born former Google top honcho Nikesh Arora as its COO and as a likely successor to founder and Chairman Masayoshi Son. It pumped in around a billion dollar in 2014-15. However, in 2016, the Indian investments took a major hit following the resignation of Arora. So far in 2016, SoftBank has made only one investment — in messaging service provider Hike.
The firm has invested about $700 million in Snapdeal, which is competing with two larger players — Amazon and Flipkart. The Delhi-based company is now struggling to raise fresh funds. Snapdeal also recently resorted to lay-offs to cut costs and improve operations.
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