Axis Bank demands Snapdeal Sellers pay off loans; Meanwhile, etailer seeks funding

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It appears that Snapdeal just can’t catch a break. Between high losses and consumer complaints, the online marketplace is allegedly in the midst of seller withdrawal due to non-payment. According to online seller association AIOVA, the ecommerce company has crores of rupees as outstanding dues and has advised sellers to stop selling on the platform.

The bad gets worse for Snapdeal sellers

All those aboard Snapdeal with loans from Axis Bank have been asked to clear their outstanding amounts immediately. The Bank sent Snapdeal sellers an email notice of the same and mentioned that failure to make payment will cause them to recall the loans and suspend overdraft facilities.

The entire loan amount should be paid by the earliest and communication of the same must be passed on to the private bank by March 24.

The bank also stated, “Axis Bank have decided to cancel withdraw the unavailed limit as sanctioned by (the) Bank. Further, for availed limit, we request you to make the payment to close the facility granted to you. Remittance of all Snapdeal & other proceeds to overdraft account will be adjusted to close the availed facility.”

But sellers are unable to pay back their loans due to non-receipt of payment for the products sold on Snapdeal.

Snapdeal said this is not true. The company’s spokesperson mentioned, “There is no delay in payment of seller dues at Snapdeal. In fact, earlier this week, payment cycle for SD+ sellers has been made faster by 40% and sellers have been communicated accordingly. Allegations of delay are being made without any basis to support the same. Sellers, partners are advised to connect with the company directly and not pay heed to baseless rumours. Loans disbursed by lenders to borrowers are governed by the terms of such lending and are to be dealt with accordingly.”

At the same time, seller group ECSAI ‘s president, Sanjay Thakur is preparing to meet with the marketplace on Wednesday to discuss non-payments, returns and other issues.

Snapdeal looking for finance too?

Over on the flip side, Snapdeal is preparing to raise funds it appears. The etailer was in talks with SoftBank, an existing investor. However, this could lead to a fall in valuation that is lower than $3 billion, a financial daily reported.

Snapdeal’s parent company, Jasper Infotech Pvt. Ltd. is looking to obtain $300 million in funding. And, around $100-150 million is expected to come from SoftBank, four anonymous sources stated.

Marketplace Snapdeal discussed fresh funds with Softbank but at a lower valuation from $3-4 billion. Last November, the investor brought down its investment value in the platform.

But, at the time, Snapdeal said through a spokesperson, “We are well capitalised and not engaged in any active financing discussions.”

Its last round of funding came in February 2016, where the etailer raised $200 million at a $6.5 billion valuation. The etailer obtained a total of $1.65 billion from 24 different investors, including Softbank and Alibaba.

Selling FreeCharge for more funds?

Snapdeal has been working on reducing its operational costs and total losses. Its current losses grew by 125% during the previous financial year. The consolidated losses of the firm are at Rs.3,315 crore from Rs.1,328 crore in 2014-15.

The platform is trying to sell off Freecharge claim reports. It has spoken with many companies including Paytm, PayU and PayPal. The company is looking to receive $400-500 million for Freecharge.

The company’s founders said they would not take salaries of a period of time that was undisclosed. Snapdeal is also laying off employees and increasing charges to reach profitability quicker.

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