Flipkart, the e-commerce giant led by Walmart, is approaching profitability, according to Kalyan Krishnamurthy, the group chief executive. Despite operating at a loss, Krishnamurthy attributes this positive trend to a substantial reduction in monthly cash burn as the company continues to scale up its businesses.
Krishnamurthy, speaking at a town hall meeting with employees, mentioned that the e-commerce giant has been actively focusing on cost reduction for the last two years, as reported by ET.
This comes as Flipkart, on Thursday (January 25), unveiled its Unified Payments Interface (UPI) offering to the first batch of users, taking another stride in strengthening its foothold in the fintech sector.
According to an insider familiar with the situation, Flipkart’s UPI service has gone live for around 10,000 users in its initial phase. The platform is set to expand its availability nationwide in the coming weeks.
According to ET’s report, the chief of the Flipkart group acknowledged the rapid expansion of its travel business, Cleartrip, affirming its position as the second-largest player in the market.
He clarified that there are no intentions for an initial public offering in 2024, emphasizing that Flipkart remains focused on optimizing resources.
“Krishnamurthy has discussed with senior leaders that profitability is likely this year but there was no timeline given. Even with the new fundraise in progress, he has mandated lower cash burn across businesses,” the report said, quoting one of the people present in the town hall.
Earlier this week, it was reported that Flipkart is considering acquiring a UPI license as part of its strategy to build a robust payment technology ecosystem akin to Amazon Pay and other platforms. This initiative is envisioned to cover a spectrum of services, including bill payments, peer-to-peer transactions, and active participation in shaping the Super.Money credit marketplace. Supported by Walmart, the e-commerce giant aspires to encourage its users to employ the in-house UPI handle for seamless e-commerce transactions, potentially enhancing checkout conversion rates.
Amid the business expansion, the company is also anticipated to implement workforce reductions in the upcoming months.
According to a Moneycontrol report, the company is slashing around 1,000 jobs as part of its annual performance review process. Accordingly, the team size is expected to be cut by 5%. Earlier, another report said that the layoff would impact around 5-7% of the total workforce.
Currently, the company has around 22,000 employees on its payroll.
However, a source familiar with the situation informed us that the reported layoff figures are speculative. The source mentioned that the company regularly conducts performance reviews, and the actual outcomes will only be disclosed by the end of March-April.
Continue Exploring: Walmart-owned Flipkart initiates annual job cuts, targets 5-7% workforce reduction by April
It is noteworthy that with the rise in smartphone usage, UPI, and the entire digital payments infrastructure have experienced significant growth in the country. In a recent development, Zomato, a prominent player in the foodtech industry, and the Indian arm of the global digital payments startup Stripe have also obtained approval from the RBI to operate as online payment aggregators.
Continue Exploring: Zomato’s ZPPL gets green light from RBI to operate as online payment aggregator
In FY23, Flipkart India, the B2B arm of the company, experienced a standalone net loss that widened by over 42% year-on-year to INR 4,845.7 Cr. Meanwhile, in FY22, Flipkart Internet, the e-commerce giant’s marketplace arm, reported a 1.5X YoY surge in its net loss to INR 4,361 Cr.
