Ecommerce marketplace, Flipkart has recently borrowed close to Rs. 450 crores from HDFC bank. In a filing with the Registrar of Companies (RoC), Flipkart has pledged fixed deposits to raise the money. The company has borrowed the money in its attempt to raise capital worth $ 1 billion.
Bankers have said that most companies raise funds through bank loans to meet their working capital needs when they are unable to raise capital from investors.
According to a banker speaking on condition of anonymity, “It is targeted at meeting day-to-day cash demands in order to maintain seamless business operations.”
Flipkart has also pledged its assets worth Rs. 1,400 crores with Deutsche Bank and Kotak Mahindra in the past.
Recently, investor Morgan Stanley brought down Flipkart’s valuation by 27%. The leading company, which is one of the main investors in Flipkart, revised the value based on market conditions and Flipkart’s performance.
However, start-ups and experts are not too worried about this move, as they don’t believe this will impact the value of the industry as a whole. Most are of the opinion that a company’s valuation is taken from its individual performance and growth. Morgan Stanley’s recent move will not adversely affect start-ups that are trying to raise capital.
“The valuation by Morgan Stanley is perhaps reflective of how investors are increasingly skittish over tech valuations nowadays and focusing more on revenue generation and profitability,” says Swati Bhargava, founder of CashKaro, a cash back company.
Dhruvil Sanghvi, founder and CEO of LogiNext Solutions, a logistics company, feels that companies with a well planned base will be able to survive under tough weather.
He says, “Most start-ups and companies have had ups and downs in their journeys. Over-valuation is usually a result of unrealistic expectations, incorrect market and consumer behaviours predictions or sometimes investor strategies.”
Pankaj Vermani, CEO of Clovia.com, an online lingerie store, feels that this is simply a corrective process that occurs in any industry.
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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