Flipkart board tells CEO to cut monthly spending by 50%
What's the story
Flipkart's board has asked CEO Kalyan Krishnamurthy to cut the company's monthly cash burn from nearly $40 million (around ₹340 crore) to $20 million (around ₹170 crore). The goal is to make the business financially efficient over the next few quarters. The move comes as the Walmart-owned e-commerce giant gears up for a possible public listing in India.
Financial metric
Cash burn is a critical indicator of company's health
Cash burn is the rate at which companies, especially start-ups, utilize their capital for business. It is a key metric of the financial health of unprofitable companies like Flipkart, showing how long they can continue to operate before needing more money. The lower the cash burn, the better the financial health and sustainability.
Expansion plans
Flipkart's aggressive expansion in quick-commerce sector
Despite the directive to cut cash burn, Flipkart is also eyeing expansion of its new business unit, Flipkart Minutes, a quick-commerce venture. The company plans to launch 500 new dark stores in the next eight months. This expansion is critical for Flipkart's competitiveness in India's fast-growing rapid delivery industry. However, it still remains to be seen how Krishnamurthy will balance cost-cutting with aggressive growth.
Board composition
Flipkart's board includes Walmart executives
The Flipkart board, which includes CEO Krishnamurthy, Lydia Jett (former managing partner for SoftBank Vision Fund), HDFC's Keki Mistry, and other Walmart executives like Dan Bartlett (executive vice president, corporate affairs at Walmart Inc), has also indicated plans to move the company's base back to India from Singapore. This would be a step toward Flipkart's goal of eventually listing on Indian stock exchanges in the future.
Financial update
Flipkart's financial performance and recent funding
In FY24, Flipkart Internet, the company's marketplace arm, posted a 21% year-on-year revenue growth at ₹17,907 crore. At the same time, the company's losses also reduced by 41% to ₹2,358 crore. This shows an improved financial performance driven by higher revenues from its advertising business. Just recently, Flipkart raised $350 million from Google as part of a larger $950 million round - its first external fundraise since being acquired by Walmart in 2018.