Snapdeal, the Indian online merchant, is in plans to raise more than $100 Million through its present shareholders such as Japan’s SoftBank and also from new investors, as reported by Anup Vikal—the company’s Chief Financial Officer.
After losing its second place to Amazon in a cutthroat online retail market in India, Snapdeal focuses to gain some profit in next 2 years; however, the company is experiencing reducing cash reserves.
Last month when sources informed Reuters about the company’s plans of searching for investment in order to increase its finances after not-so-successful discussions with Alibaba Group Holding Ltd., existing investor, and Chinese funds, Vikal further stated that Snapdeal has sufficient cash for the present year.
Further in the interview with Reuters, Vikal revealed that more than $100 Million is the requirement for being independent. He also added that present investors such as SoftBank, who is also the company’s largest backup, are ready to contribute in the fundraising. However, SoftBank refused to discuss anything on this matter.
Flipkart dominates the India’s rapidly increasing online retail sector.
Snapdeal was successful in gaining $6.5 Billion valuation last year by Canada’s Ontario Teachers’ Pension Plan. However, its loss of second position to Amazon and the reducing cash reserves gives signs that the company will have to elevate money comparatively at a lower valuation.
Vikal further revealed that the company by making use of automated systems has cut costs in order to reduce labor costs. It has also again negotiated the vendor contracts and has planned to release the extra floor space at the other headquarters that are outside New Delhi.
Furthermore, Vulcan Express—Snapdeal’s logistics unit—and Unicommerce—a provider of e-commerce solutions—will evenly break in June, giving a boost to the company’s plan of gaining profit, Vikal said.
In the month of February, Snapdeal even let off 600 employees. Not only this, the founders Rohit Bansal and Kunal Bahl also blocked their salaries.
At the end, time will only show how successful Snapdeal becomes in retaining its position in the world of online retail market and by what means. Best wishes with Snapdeal. Till then stay tuned with us for more details.