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BENGALURU, India: India’s biggest e-commerce firm Flipkart will remain private for the next three years at least, its chief financial officer said, nixing speculation that it would launch this year an IPO that some bankers had expected to raise a record $5 billion.
Flipkart, an online marketplace that analysts estimate to be worth $11 billion, has benefited from the foreign funds that have sloshed into India’s rapidly growing online retail sector.
The industry attracted $5 billion in 2014 alone, according to Morgan Stanley, from investors including Japan’s SoftBank Corp. and the Qatar Investment Authority.
This has eased the pressure on firms like Flipkart to go public.
Chief Financial Officer Sanjay Baweja said that the company founded in 2007 by former Amazon.com Inc. employees had enough money to last it three to four years, if it maintained the same rate of investment.
He also said Flipkart wasn’t ready yet for the stock market and that an initial public offering was not part of its current three-to-five year business plan.
The company expects to double the value of goods its sells to $8 billion by the end of this year from March.
“I don’t think we’re at a stage in our life cycle that we would want to stand scrutiny on a quarterly basis,” said Baweja, who was hired from telecoms firm Tata Communications last year.
“Therefore going to the public market is not something that we’re actively considering,” he said at the company’s offices.
Local media had over the past months quoted unnamed investors as saying Flipkart was poised to follow in the footsteps of Chinese e-commerce giant Alibaba Group Holding Ltd. and list in New York after raising up to $5 billion, the most for an Indian company, in an initial public offering.
Flipkart sells everything from cellphones to suitcases and cosmetics, competing with home grown rival Snapdeal and Amazon’s India unit.
Current investors include Tiger Global Management and Accel Partners and the company raised at least $1.7 billion last year, according to public statements.
Flipkart does not disclose its financials, but like its rivals it has yet to turn a profit, largely due to the steep discounts it offers customers and heavy spending on marketing, technology and a delivery network.
Baweja said the discounting, key in the e-commerce “land grab,” would ease and that Flipkart would turn a profit within the three-to-five year plan.
He said Flipkart would soon start selling furniture and, once it works out logistics, packaged goods and groceries, items which account for the bulk of most consumers’ daily spending.
The company is also betting on the hundreds of millions of Indians living in smaller towns who are unable to buy all their needs at local retailers.
“We believe the growth, the next wave of growth will come not from the tier one or tier two... but the real chunky growth will happen from tier 3, 4, 5, 6 cities and towns,” he added.