Cloudtail India, a joint venture between Amazon and NR Narayana Murthy's family office Catamaran Ventures, has posted losses for FY18, though it has shown decent revenue growth.
The e-commerce company clocked in revenues of ₹7,149 crore, up 27 per cent from ₹5,631 crore in FY17, according to documents sourced from paper.vc, a data intelligence platform. However, Cloudtail posted a loss of ₹4.1 crore in FY18, against a profit of ₹1.59 crore in the previous fiscal. It also said the average net loss for the last three years was ₹10.9 crore.
The filing further said Cloudtail has appointed Sumit Sahay as its new CEO.
While Cloudtail’s revenue grew, the tax liability came in at ₹5.34 crore, lower than the ₹28.2 crore it paid in FY17. The company’s expenses came in at ₹7,158 crore, more than its revenues, highlighting its business model where much money is invested to draw customers via discounts.
Further, Cloudtail stated that its foreign exchange outflow was ₹233 crore, while its inflow reduced to ₹3.06 crore, against ₹9.6 crore in FY17.
These developments need to be seen in the backdrop of a second draft of the e-commerce policy set to be released soon. In September, the Confederation of All India Traders (CAIT) had written to Union Commerce Minister Suresh Prabhu, seeking a codified policy, in addition to a regulatory authority, to regulate and monitor the market.
E-commerce majors — supported by heavy funding — are continuing with predatory pricing and deep discounting, which creates an uneven playing field for small e-tailers, said the CAIT note. Revised FDI laws in March 2016 allows FDI in online marketplaces but caps the contribution of a single seller to 25 per cent of the marketplace’s total business.
An e-commerce firm in India is defined as one where foreign investment doesn’t exceed 49 per cent, the founder/promoter is a resident Indian and the platform company is controlled by Indian management.
FDI inflows in trading (including via e-commerce), jumped 86 per cent to $4.35 billion in FY18. Foreign players are looking aggressively to invest in the Indian e-commerce market, which, Morgan Stanley estimates, is expected to grow to $200 billion in a decade.