The acquisition of Flipkart by Walmart may negatively impact the net income of the latter this fiscal and also the next, said Walmart in its recent regulatory filing.
The US retail giant had last month said it completed the acquisition of 77 per cent stake in Flipkart Group, an Indian-based eCommerce marketplace, for approximately $16 Billion.
“We also expect the ongoing operations of Flipkart to negatively impact fiscal 2019 and 2020 net income, including additional interest expense due to the long-term debt issuance in the second quarter of of fiscal 2019,” Walmart said.
Beginning in the third quarter of fiscal 2018, Walmart will consolidate the financial statements of Flipkart using a one-month lag, it added.
Speaking in an investors meet in US recently, Douglas McMillon, president, CEO and director Walmart Inc said they are learning about retail ecosystems and how they work around the world.
We’re learning a lot from China. We’ll be learning even more from India.And we basically want to be in places that have a tremendous opportunity, which is what led us to Flipkart in India,” he said in response to a query.
According to him, Flipkart, which has a strong management team, was built out an ecosystem.
In the case of India, it’s worth it. If it had been a smaller market, we may have passed. But this is a unique opportunity.
And when you look out 5, 10, 20 years from now, time will tell,” McMillo had said.
As Flipkart is expected to generate meaningful losses for at least the next few years, this is clearly an investment for Walmart for the future,” Moody’s vice president Charlie O’Shea had earlier said in a report commenting on the acquisition.