Thursday 7 February 2019

Walmart remains confident of India's potential: Kalyan Krishnamurthy

BENGALURU: Allaying fears of employees following a Morgan Stanley report that suggested Walmart could exit from its investment in Flipkart, CEO Kalyan Krishnamurthy in a letter addressed to the staff said that “the report couldn’t be further from the truth”. 

The Wall Street brokerage firm in a report dated February 4 had stated that Walmart’s exit was not out of the question considering the recent complications in India’s e-commerce market, after the government clamped down on players influencing prices and controlling inventories on their platforms.

“Walmart remains extremely confident in the potential of the Indian market and in Flipkart’s ability to lead the e-commerce space. By partnering with Flipkart, Walmart has taken a long-term view of the opportunities and hence is unfazed with any short-term hurdles,” Krishnamurthy wrote in a letter to Flipkart employees.

ET had reported on the Morgan Stanley report on February 5, which came after the Indian government introduced new rules for FDI in the sector that got implemented on February 1. The changes caused Flipkart’s chief rival Amazon to take down thousands of products listed by Cloudtail and Appario, sellers in which it had equity participation.

Morgan Stanley said that these changes made it more expensive for e-commerce marketplaces to do business in the country, adding to the massive losses that these firms were already clocking. Flipkart and Amazon have pumped in billions of dollars over the past few years to build their businesses and discount products to capture mind and market share here.

“New e-commerce regulations in India increase the cost of doing business and add uncertainty over Flipkart losses. While the situation is fluid and may evolve positively or negatively, we run scenarios on possible financial outcomes. In our base case, see 1.5%/2% hits to '19/'20 WMT EPS,” the report read.

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