While foreign investments have been raining in Indian e-commerce marketplace, Foxconn Technology Group has announced another write off of an additional $40 million of its $200 million in e-commerce company Snapdeal.
Earlier in August 2017, FIH Mobile had written in its annual report that its entire $200 million investment in Jasper Infotech ( Snapdeal owner and operator) cannot be recovered.
Moreover, Foxconn had registered impairment loss of around $160 Mn for its investment in Jasper Infotech for six months and the loss period ended June 30, 2017.
FIH Mobile, The subsidiary of world’s largest contractor Foxconn has forecasted that the recoverable amount from its investment in Jasper Infotech is $3 Mn while citing the failed merger between Flipkart and Snapdeal as being one of the causes behind its decision to record $160 Mn impairment. FIH Mobile is primarily Foxconn unit for non-Apple phones that in-house brands such as Xiaomi and Huawei as its clients.
The Annual Report Read,
The negotiations were finally terminated due to dissent of minority shareholders and complicated tax problems between Singapore and India. In 2017, the main market players had moved into the next stage to provide more products and services via collaboration with various business partners, which limited the room for JIPL to develop in the future.
The former FIH’s mobile investment in Snapdeal had witnessed a pick up of over 4% stake in Gurgaon based retail valuing it at $4-$4.5 billion, thereby making it float among the most richly-valued consumer internet startups to have emerged from India.
But, very soon Snapdeal’s fortune plummeted with the company making it challenging for rival Flipkart to keep its hold at the top position in the country’s e-commerce sector.
Snapdeal- Constant Struggles and Tough Times Ahead
Meanwhile, Snapdeal is seen constantly struggling to remain afloat amidst increasing competition from Flipkart and Amazon. In April 2017, after its valuation fell to $1 Bn, Snapdeal’s biggest investor SoftBank proposed a merger with rival Flipkart.
- Last year, the company’s main backer, SoftBank, attempted to sew together a merger between it and its largest rival Flipkart, which, however, failed to materialise.
- The company had also reported a 75% increase in its loss for the year that ended March 2017. It’s survival struggles have made it lose out all its subsidiaries at a very low amount.
- Recently, it has given off its cloud-based inventory management subsidiary, Unicommerce to Infibeam for $17.8 Mn Moreover, Freecharge which was acquired by Snapdeal for $400 Mn has also been sold to Axis Bank last year for meagre $60 Mn.
While we are witnessing a time of upcoming war between Walmart-Flipkart and Amazon post biggest e-commerce deal that has come into play, Snapdeal will surely have to face a tough time to recapitalise and revive itself in the market.