Appeared this morning in the Mint:
Also, this section expanded
So, this is the math:
Top line Revenues for March 2013 = 1180 crores (190 million US$)
Cost of Operations for March 2013 = 1366 crores (220 million US$)
Loss for March 2013 = 281 crores (45 million US$) (note – loss seems to include other items like depreciation etc)
Cash Loss (assumed) for March 2013 = 186 crores (30 million US$) ( deducting costs from revenues)
Deductions:
The net loss is currently 24 % of the top line (= 281/1180 %)
This means that:
If Flipkart wants to achieve a 1 billion dollar top line by 2015 (As stated by Bansal), it will at the minimum, need to burn a LOT more money in the next 2 years, as demonstrated below:
Assume that top line will be US $ 500 million (2.5x of current?) in the year ended March 2014
The burn will be 125 million $ (assuming 25%)
Assume that top line will be 1000 million (1 billion) in the year ended March 2015
Burn will be 250 million US$ (assuming 25%)
Total burn in the next 2 years = 375 million
Given that the Company raised 360 mn dollars this year (and has US$ 26 million as on March 2012), it has a total of 386 million. That’s almost the exact amount in needs to cover its cash burn for the next 2 years as per my calculations 🙂
Conclusions:
So, at a 1 billion US$ top line in March 2015, the Company will IPO at least at 2-5 billion? (Read the analytics here)
That’s GREAT because the company will return at least 3-4 x on the money of the investors (blended) as per my analysis here.
3 Deep Questions:
1. Who will fund the ongoing losses of Flipkart AFTER the IPO?
If Flipkart loses 25% on its top line (and assume that the loss % goes to a lower number of 15%), then at 2 billion top line for 2016, it will still need 300 million US$ to burn? Who will fund that?
2. If the burn is to be stopped, then Flipkart needs to INCREASE its prices by 25%!
Is that possible ever, given that Flipkart is the place where consumers have got addicted to buying stuff cheap, supported by DREAM deliveries?
3. Will stock markets accept Flipkart to be ‘the Amazon’ of India and give it valuations like it does to Amazon despite losses (although the losses of Amazon are intentional in the case of Amazon)?
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Please reply and do read my earlier Doodh ka Doodh, Paani ka Paani analysis of Flikpart :
