While success stories of India’s e-commerce startups continue to make news, there’s also the flip side, wherein some of these startups have been registering massive losses. In one such case, Japanese telecom and internet giant Softbank has reported that it has lost close to $350 million from its investments in Snapdeal and Ola. The losses are applicable for the nine months, from April 1 to December 31, 2016. In Indian Rupee, this translates into a loss of a staggering Rs 2,340 crore. Earlier, during 2016, Softbank had reported a loss of $550 million from investments in Snapdeal and Ola, applicable for the period between April and September, 2016. It appears that losses have piled up in the 4th quarter of 2016 to reach $350 million on December 31, 2016.
However, experts said that such losses cannot be used to ascertain the performance of Snapdeal and Ola, as a significant percentage of these losses are due to currency fluctuations and accounting norms.
Currently both Snapdeal and Ola are seeking additional rounds of funding to strengthen their position in the market. Both these companies are facing tough competition from other larger players in the market. Getting fresh funds has been a challenge since the valuation of these companies has eroded in recent times.
It may be recalled that Softbank became a major shareholder in Snapdeal when it invested $627 million in 2014.