A drop in valuation may have dented e-commerce major Flipkart’s image a bit, but it will not affect its ability to raise fresh funds at earlier levels of equity payout.

“All these valuations are notional and have no relevance because ultimately it is all about what an investor is willing to invest in a company and at what price the company is willing to give away its equity,” Avnish Bajaj, Managing Director, Matrix Partners India, told BusinessLine .

GMV E-commerce start-up valuations are typically calculated at 2-3 times of their GMV achieved and during high growth phases, valuations could go up to four times, he said.

According to data collected from multiple sources in the VC community, it is safe to peg Flipkart’s current valuation between $8.8 billion and $10.5 billion. Flipkart has seen 12 rounds of equity funding worth a total of $3 billion. Earlier this week, two of its mutual fund investors, Fidelity Rutland Square Trust II and VALIC Co, marked down the valuation of their holdings in Flipkart by 20 per cent.

In February, for the first time since Flipkart’s dream run in valuations — which rose to $15.2 billion, from $11 billion, when it raised $700 million in December 2014 and when it raised another $700 million, six months later in July 2015 — its valuation was cut short when Morgan Stanley Institutional Fund Trust, a mutual fund investor in Flipkart, marked down the value of its holdings by 27 per cent to $11 billion from $15.2 billion. Shortly after, T Rowe Price brought down the value of its stake in Flipkart by 15 per cent, in March.

After registering high growth GMV rates during the bumper Diwali sales, the industry had registered a 19-per cent drop in GMV in Q4 (January-March) of FY 2016 and some of the large players witnessed anywhere from 10-50-per cent drop in GMV, observed Anil Kumar, CEO of RedSeer Consulting, that advises new-age economy firms.

“While last year was a hyper growth year for most e-commerce start-ups, the pre-shipment cancellations for the e-commerce industry in March was 10-11 per cent; returns were a high 15-16 per cent of the shipped GMV and cash burn, largely in the form of discounts in March, was 16-18 per cent of industry shipped GMV,” pointed out Kumar.

For the next 6-8 months, the funding scenario from investors looks bleak as they are in a wait-and-watch mode, and are currently in the process of pushing start-ups to break even in FY 2017, before they part with fresh funding, he said.

Discounts As a consequence, Flipkart and other e-commerce start-ups have started easing up on lavish discounts post Diwali season, when consumers were spoilt for choice with every e-commerce player offering huge discounts ranging from 20-70 per cent across all categories of products.

“Flipkart has shifted its focus away from discounting to customer-centricity, where it is tracking two important customer service metrics — returns and query resolution. They are looking to reduce costs by reducing returns and improving customer experience by resolving issues in real time,” said an insider who wished to remain unnamed.

BusinessLine had reported in October that Flipkart had added three new call centres with 1,000 agents, who were all trained to resolve customer queries, requests or complaints in less than five minutes.

A large vendor who works closely with Flipkart said, ever since Binny Bansal took over as CEO earlier this year, Flipkart has tightened its act and brought back ‘Purchase Order’ and ‘Purchase Review’ approvals which have to go through two-three rounds of negotiations before it is approved, unlike earlier when approvals were given verbally.

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