Walmart, world’s largest company by revenue is planning to infuse $1.2 billion of cash equivalents for funding India’s biggest e-commerce giant Flipkart’s operation.
The development came months after Walmart acquired 77 per cent in Flipkart for a cash consideration of approximately $16 billion.
“As of April 30, 2019 and January 31, 2019, cash and cash equivalents of $2.7 billion and $2.8 billion, respectively, may not be freely transferable to the US due to local laws or other restrictions. Of the $2.7 billion at April 30, 2019, approximately $1.2 billion can only be accessed through dividends or inter-company financing arrangements subject to approval by Flipkart minority shareholders. However, this cash is expected to be utilised to fund the operations of Flipkart,” Walmart said, cited yourstory.
However, Walmart’s total cash and cash equivalents were $9.3 billion in April 30, 2019.
Flipkart, owned by Walmart, is based out of Bengaluru, founded by Sachin Bansal and Binny Bansal together in 2007. The company initially focused on book sales, before expanding into other product categories such as consumer electronics, fashion, and lifestyle products.
Walmart, owned by Walton family, is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. It came into existence in 1962 by Sam Walton.
Whereas, details of the structure of financial transaction is still unknown, and Flipkart incurred a loss of Rs 46,901 crore on an increased revenue of Rs 30,164 crore for the financial year 2018.
On the other hand, when Walmart acquired the majority stake in Flipkart, it valued the company at about $24 billion, which comprised primarily of $2.2 billion in cash and cash equivalents, $2.8 billion in other current assets, $5.0 billion in intangible assets, and $13.5 billion in goodwill.
The company also had liabilities of $3.7 billion, which comprised primarily of $1.8 billion of current liabilities and $1.8 billion of deferred income taxes.
Moreover, Walmart’s total revenues for the three months ending April quarter of FY20 increased by $1.2 billion to $123.9 billion, compared to the same period in the previous fiscal year.
“The increase in revenues was due to an increase in net sales, which was primarily due to overall positive comparable sales for the Walmart US and Sam’s Club segments, the addition of Flipkart’s net sales, and positive comparable sales in the majority of our International markets. This increases was partially offset by a $1.8 billion negative impact of fluctuations in currency exchange rates and our sale of the majority stake in Walmart Brazil,” the company stated further.