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Business News/ Companies / News/  Flipkart struggling with ramping up supplies to meet demand, say co-founders
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Flipkart struggling with ramping up supplies to meet demand, say co-founders

Co-founders Sachin Bansal and Binny Bansal talk in an interview about how the firm plans to use the funds it raised recently and other future plans

Flipkart founders Binny Bansal and Sachin Bansal. Photo: Hemant Mishra/MintPremium
Flipkart founders Binny Bansal and Sachin Bansal. Photo: Hemant Mishra/Mint

Online retailer Flipkart on Tuesday announced it received $1 billion (around 6,000 crore) in fresh capital, one of the largest-ever fund-raise by an Internet firm globally and the largest ever by an Indian start-up.

In an interview, co-founders Sachin Bansal and Binny Bansal (not related) talk about the significance of the fundraise, how the company plans to use the money and its long-term plans for an initial public offering (IPO). Edited excerpts:

What is the kind of growth you are seeing right now?

Sachin: The growth that we are seeing is exponential. In general, as the revenue base of companies grows to a certain extent, the growth slows down as a percentage. But here it’s not happening. We are growing fast on a larger base.

Binny: Our growth is, in fact, much faster than we expected ourselves. So our supplies are always behind. We are constantly struggling with ramping up our supplies to meet the demand. That’s the situation we are in right now.

You raised nearly $800 million in one year before this latest round. Why did you go for another fund-raise and how will you use the money?

Sachin: We didn’t really have to raise this money. But when the option to raise this money opened up, we raised it. From a private investment point of view, this is probably the third or fourth largest private investment raised by any Internet company in the world.

The future of India’s Internet is very bright and I believe Flipkart is positioned at the right place at the right time to capture the growth that is coming.

Binny: We will use these funds to step up our investments in the technology and mobile space, and in creating a whole new commerce ecosystem for entrepreneurs, sellers and brands.

A few months ago e-commerce firms were chasing investors for money. Now, it seems it’s the other way round. What’s changed?

Sachin: That’s how it should be. In the Indian start-up space, we have had some great ideas, great teams but not enough funds. That is changing very fast. If you look at the Silicon Valley, there is 5-6 times more investment in the private investment space as compared to India.

Binny: Also, the rate of growth of Internet has really picked in India. The Internet economy is going to be very big in India. Mobile Internet will drive it.

What are the IPO plans?

Sachin: The world is actually different now than it was 10 years back. Today investors have enough appetite. For example, a lot of Facebook investors are still invested even after they went public. IPO is long-term. We are not thinking about IPO right now. When we feel we are ready as a company, when the market is ready for us, and when our business model has stabilized, then probably we will look at that.

Because of the foreign direct investment (FDI) rules, e-commerce firms in India have had to adopt a complicated structure to try and comply with them. Does that have anything to do with your thinking on the IPO?

Sachin: From the structure point of view, we are absolutely legal. It goes back to the investors we are getting on board. From the legal point of view, I think that’s not a concern at all.

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Published: 29 Jul 2014, 11:35 PM IST
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