Snapdeal Devaluation – Race for Survival

Flipkart and Snapdeal are amongst the most tracked Private Companies in India. Often referred to as the ‘Indian Unicorns’ these companies continue to be tagged as Startups while their valuation are greater than 90% of the companies listed on the BSE including the likes of Tata Motors and Jet Airways.

Is is especially relevant to note that the GMV-Gross Merchandise Value ( or the total value of Goods Sold) on Flipkart and Snapdeal has been gargantuan despite which Flipkart was devalued early this year by Morgan Stanley indicating the inaccuracy of evaluating e-commerce companies on the basis of GMV.

Snapdeal Devaluation

Snapdeal reported revenue of Rs. 9.3 Billion in 2015 and a loss of Rs. 13.19 Billion. As a result of mounting losses Snapdeal has raised investments continuously every year and multiple times in a year. It thus comes as no surprise that since 2014 Snapdeal has issued shares consistently at lowered valuations.

We found that the per share premium of 4,22,392 was paid in 2014 against 1,65,919 which was the per share premium paid in 2016 by the investors. Capital thus was raised by SnapDeal at a significantly lower valuation.

Snapdeal Devaluation

Snapdeal has raised investments from over 20 funds, which is rather high and among the highest number of funds a company has tapped into for investments in India.

  • ebay Singapore Services Pte. Ltd
  • Bessemer
  • Sequoia
  • Temasek
  • Blackrock International Opportunities Portfolio
  • NEA -Indo US Venture Capital
  • Nexus India Direct Investments II
  • Starfish I Pte Ltd
  • Kalaari Capita
  • Nexus Opportunity Fund
  • Intel Capital
  • Shali Mauritius Private Limited
  • BaccaSnapdeal Mauritius Private Limited
  • Myriad Opportunities Master Fund Limited
  • Aquila Investments I
  • PI Opportunities Fund -I
  • Ru-Net South Asia
  • Valiant Mauritius Partners FDI Limited
  • Angel Investment Venture Capital
  • Saama Capital II
  • Shali Mauritius Private Limited

Snapdeal Hedging Risk through Strategic Diversification

Snapdeal is present in other related sectors including Logistics, Digital Financing Services, Payment Gateway, Online Recharge and TV/Online marketing through ts subsidiaries and joint ventures. A list of Snapdeal’s Associate, Joint Venture and Subsidiary companies are as follow –

Snapdeal Blog 2

Snapdeal Blog 3

It is noteworthy that Snapdeal is also entering the Indian luxury and lifestyle products market and has engaged in an agreement with 1506 LLC . 1506 LLC, a limited liability company registered in New York, engaged in operation of a website in India which is operated as a marketplace for marketing and sale of Indian luxury and lifestyle products, and had agreement with more than 100 designers and brands across the world.

Snapdeal Blog 4

In addition Snapdeal is in a similar engagement with Wizmunk Gifting Services Private Limited (Wizmunk). Wizmunk is engaged in the business of online gift recommendations through its website which is a platform/search engine that searches gift items and products from other websites with whom it has tie-up and directs the users to those websites.

Snapdeal Blog 5

Finally Snapdeal is also in a merger with Unicommerce e-solutions Private Limited . This merger is likely to help Snapdeal in getting access to technology that helps promote market place operations.

In conclusion, we anticipate a rough sail in the coming few years for Snapdeal and other e-commerce players in India. Consequently the entry of Reliance in the market with the competition is likely to get fierce.

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