Racing to the top

With rising competition, can Flipkart deliver the expected growth to justify the generosity of its investors?

Amazon founder, Jeff Bezos would not have imagined in his wildest dreams that two of his relatively junior ex-employees would one day compete with him in the high stakes world of online retail. Sachin Bansal and Binny Bansal, who started Flipkart in 2007, went on to become the poster boys of Indian e-tail. From being a two-member startup with an initial capital of ₹5 lakh, Flipkart has grown at break-neck speed to become a formidable force with some 22 million registered users.

The absence of competitors and the potential opportunity in e-tailing put them into a hyper-growth mode, which was further fuelled by investors who were willing to bet on an early mover in an emerging business. With every round, the stakes have only got bigger. In the latest round, Flipkart raised a mind-boggling billion dollars from its new and existing investors. This fund raising frenzy, despite little or negligible profit, has many in a tizzy. 

With rising competition from an astute global player such as Amazon at one end and burgeoning, price cutting local players at the other, can Flipkart deliver the expected growth to justify the generosity of its investors? That is the subject of our cover story, Clear And Present Danger.

An online retailer such as Flipkart seems to be awash in capital but someone like DLF, with hard assets on the ground, might soon find itself facing a liquidity crunch. The Gurgaon-centered real estate major has been banned by Sebi for three years from the capital market and cannot raise funds either through debt or equity. As DLF contests this body blow, it is hard to reconcile that in 2007, it was among the biggest in market cap and that its current market cap of ₹19,000 crore is a pale shadow in comparison. Of course, land prices being where they are, DLF still has the option of liquidating some part of its considerable land bank to raise cash. Its hard times might be a source of opportunity for real estate investors flush with cash. But does it make sense to bottom fish as an investor, given that the stock is trading near its all-time low. To find out more, check out Battling The Odds.