Flipkart aims to halve its monthly expenditure to raise fresh capital

Flipkart aims to cut its monthly expenditure by half as it prepares to raise fresh capital of Rs 3,400-5,400 crore ($500-800 million), as per some reliable sources.

The company, which is keen to shore up its reserves, could settle for a valuation of USD10-12 billion, according to the sources. This will mark a down round from a high of $15.2 billion when it last raised capital in 2015.

The sources also revealed, "Final valuation could change depending on investor interest and terms of the deal."

They estimate that the company — which also includes fashion portals Myntra and Jabong, besides payments business PhonePe — will trim its monthly burn rate to about USD20 million from about USD45 million about six months ago.

Flipkart declined to comment on the plans to trim costs and raise money at a lower valuation. The developments come at a time when Flipkart's talks with Walmart for a possible investment have failed to fructify, said two people aware of the details.

A spokeswoman for Walmart, who termed India an important market for the company, said, "We regularly meet with different companies in global retail markets, not all of those meetings lead to business transactions and we don't share details of our discussions with individual companies."

Flipkart, meanwhile, has begun talks with American ecommerce player eBay, said a third person aware of the development.

A representative for eBay declined to comment on what the company termed "rumour and speculation".

eBay also owns over 6 percent stake in online marketplace Snapdeal, which competes with Flipkart. These plans to cut costs and raise fresh capital are seen as critical for Flipkart as it fights to retain its lead in the Indian market over American online retail giant Amazon, while also bracing for the entry of China's Alibaba.