Amazon Inc. invested Rs 3,400 crore in its India unit, the largest investment by the Jeff Bezos-owned online retailer in the country this year, as it contends with larger rival Flipkart for a share in the pie of domestic e-commerce market.
Amazon India allotted 3.4 billion equity shares of Rs 10 each, aggregating to Rs 3,400 crore or around $476 million at par on rights basis to the existing shareholders of the company, according to the regulatory documents filed with the Ministry of Corporate Affairs. Singapore-based Amazon Corporate Holdings Pvt. Ltd. and Mauritius-based Amazon.com.inc Ltd. invested in the company.
The fresh funds infusion came on Oct. 14 at a time the online retailer was hosting its ‘Great India Festival’—a Diwali festival special sale. Amazon and Flipkart, according to market researcher Forrester Research, are expected to sell goods worth $4.8 billion during India festival sales between Sept. 25 and Oct. 29.
This is Amazon’s second investment in its India marketplace this year. In June, it had invested Rs 2,800 crore. The overall investment by the Seattle-based parent into the India business stands at $868 million, or about Rs 6,200 crore, during the year. This came at a time India implemented new e-commerce regulations, including barring firms from cutting exclusive arrangements with sellers, offering deep discounts or holding any business interest in online merchants on their websites.
Amazon has focused on India as it lost out to Jack Ma-led Alibaba and JD.com Inc. in China. The U.S.-based e-commerce firm pledged to invest more than $5 billion in India to take on the local heavyweight. The battle for supremacy got intensified after Walmart Inc. invested $16 billion in Flipkart last year.
Losses Narrow, Revenue At $1 Billion
Amazon’s loss narrowed to about Rs 5,685 crore in the financial year ended March 2019 from Rs 6,287 crore a year ago, the filings showed.
The company said it suffered losses as it continues to invest in establishing infrastructure, opening new fulfillment centres, and technology advancement.
While Amazon’s revenue from operations jumped nearly 54 percent at $1 billion (around Rs 7,593 crore) in the country in FY19, its expenses soared as the company spends aggressively to expand its dominance in India. Amazon, according to the filings, burned $1.7 billion in the last financial year.
Amazon said it will continue to launch new products and services for its customers and sellers in India as it remains “confident” on its future growth in the country.―Bloomberg Quint