Snapdeal 2.0-Is it Possible?

Breaking all the speculations of last 6 months, Snapdeal ended its
merger talks with Flipkart and chose an independent path for
itself. A bold move by its co-founders Kunal Bahl and Rohit
Bansal to go against the wishes of company’s investors especially
Soft Bank who was a staunch admirer of taking the deal from
An offer of $850 million was rejected earlier in July by Snapdeal
and Flipkart was asked for reconsideration. Later Flipkart made
another offer of around $950 million which was likely to be
accepted by Snapdeal but as it turned out, the founders have a
different game plan.
“As we have been exploring strategic options over the months, we
have decided to pursue an independent path and terminate all
strategic discussions, said a Snapdeal spokesperson in a
statement, without referring to Flipkart.
Snapdeal has been in troubled waters since the time Amazon
entered the e-tail race in India. With Amazon and Flipkart both
racing for the top e-tailer position in India, Snapdeal somehow lost
its grip over the market. Snapdeal’s losses doubled to Rs 2,960
crore for the fiscal year ending March 31, 2016 compared to Rs
1,319 crore in the previous year, according to regulatory filings
sourced from a business research platform Tofler. It has also
found it difficult to raise fresh capital at its $6.5-billion valuation.
It had 9000 employees in July 2016 which have been reduced to
1200 currently. A further plan of more dismissals is possible in the
near future.
“Needless to say, we need to keep a tight control on our costs

and work towards becoming an efficient culture, delivering
profitable growth, month on month,” said Kunal Bahl.
The company is looking towards making profit of Rs150 crore in
the next 12 months. In order to sustain themselves, Freecharge
has been sold to Axis Bank in Rs385 crore, hence company won’t
need to raise any additional capital.
“We have a compelling direction (Snapdeal 2.0) to create life-
changing experiences for millions of buyers and sellers across the
country,” said the Snapdeal statement.
The founders are showing confidence in their new strategy and
they are trying to keep up the hopes of its investors. But only time
will tell that will this gamble pay-off well or will it turn out to be a
Utopian dream.
(With inputs from IANS)

Abhineet Gupta
(HR Head and Analyst
Webdaksha Solutions)



India’s Snapdeal calls off sale to Flipkart in setback for SoftBank

MUMBAI/BENGALURU (Reuters) – India’s Snapdeal said it had decided to remain independent and was ending all talks regarding a sale, bringing the curtain down on months of discussions around a possible acquisition of the e-commerce firm by bigger rival Flipkart.

The failure to forge a deal is a setback for SoftBank Group (9984.T), the largest investor in Snapdeal, as the Japanese firm has been trying to engineer an all-stock transaction for months, as a means to secure a sizeable stake in Flipkart, India’s largest home-grown e-commerce player.

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