Flipkart management is working on making the consumer internet company IPO-ready, with plans of a potential US listing by 2022, according to reports. Flipkart group CEO Kalyan Krishnamurthy held discussions with senior leadership team on the IPO timeline earlier this month at a board meeting in Bentonville, Arkansas, the Economic Times reported. Flipkart declined to comment on the board level discussions.
The move comes amid reports that Walmart, which owns 77 percent in Flipkart, is looking at IPO as a possible exit route. "In the last two weeks there have been discussions between the Flipkart CEO and his key people to chart out a plan to make the company IPO ready," ET cited people familiar with the matter as saying.
The core team comprising Krishnamurthy and senior vice-presidents has been discussing ways to take the company to profitability within two years before it goes public.
Considering the dip in the financial performance Walmart suffered in the first quarter, the US giant is planning to focus on making Flipkart profitable. Walmart might be looking to use an initial public offering (IPO) to exit Flipkart, as per reports. Walmarts vision is to create a definitive framework for the IPO and gain optimum profits from the India based company within one year of the acquisition.
"Aside from policy changes that hit e-commerce players with the implementation of new foreign direct investment (FDI) regulations, making the business profitable in a largely discount-led industry is challenging for Walmart," the ET reprot further said.
Walmart's woes
World's biggest retailer Walmart Inc. reported a fall in its gross profit rate and operating income in its international business in the February-April quarter. The primary reason attributed to the investment made in Flipkart in this year's financial performance. The Bentonville-based behemoth has, however, said that the years earnings dilution related to Flipkart is still as per the expectation of the company.
