Walmart is expected to pump in $1.2 billion to fund Flipkart's operations

The retail giant's total revenue increased $1.2 billion or 1 per cent for the three months ended April 30, 2019, due to the addition of Flipkart's net sales besides other factors.

Business Standard : Walmart is expected to pump $1.2 billion into Flipkart's operations Flipkart. The world’s largest retailer acquired homegrown e-commerce company Flipkart for $16 billion last year, pitching it in direct competition with its rival Amazon.com in a battle for dominance of India’s online retail market.

As of April 30, 2019, and January 31, 2019, Walmart reported cash and cash equivalents of $2.7 billion and $2.8 billion, respectively, according to filings with the United States Securities and Exchange Commission made by Walmart last week. Of the $2.7 billion of cash, approximately $1.2 billion can only be accessed through dividends or inter-company financing arrangements, subject to approval of Flipkart's minority shareholders. 

“However, this cash is expected to be utilised to fund the operations of Flipkart,” said the filing.

The net cash used by the Bentonville, Arkansas-based company in financing activities decreased $1.6 billion for the three months ended April 2019, compared to the same period in the previous financial year. This decrease was partially impacted by the Flipkart acquisition. Walmart reported a working capital deficit of $18.1 billion on April 30, 2019, compared to $21.5 billion in 2018. This decline was primarily due to higher current assets as a result of the consolidation of Flipkart.

Due to the anticipation of announcing Flipkart’s acquisition, Walmart had suspended its share repurchases. However, the share repurchases have increased $1.6 billion for the three months ended April 30, 2019, compared to the same period in the previous finanical year.

Walmart’s total revenue increased $1.2 billion or 1 per cent in the three months to April 30, 2019, when compared to the same period in the previous fiscal year. This increase was due to the addition of Flipkart’s net sales besides other factors.

During April-May this year, Walmart President and Chief Executive Officer (CEO) Doug McMillon and Judith McKenna, president and CEO of Walmart International, visited India to assess the progress made by Flipkart. They also met the senior leadership of Flipkart and group companies — Myntra and PhonePe — and is learnt to have discussed strategy to take on Amazon.

Amazon has stepped up its investment in India and recently pumped Rs 2,800 crore into its marketplace. The fresh investment comes at a time when the Seattle-headquartered firm has logged out from China. In December last year, Amazon invested Rs 2,200 crore in its Indian entity. Jeff Bezos-led Amazon has so far made over $5-billion investments in India. Some reports suggest that the company may have invested an additional $2 billion on top of that.