US online retail giant eBay has written off its investment in ailing Indian e-commerce marketplace Snapdeal amounting to a loss of $61 million, which it recorded on its books for the year 2017.
eBay has followed in the footsteps of Japanese investor Softbank which wrote off $1 billion in losses on account of erosion of value of the shares it held in Snapdeal, soon after it failed to engineer a merger of the company with Flipkart.
“In 2017, we recorded a $61 million impairment charge to write-down our cost method investment in Jasper Infotech Private Limited (Snapdeal). The investment was measured at fair value due to events and circumstances that we identified as having significant impact on its fair value,” eBay said in its filings to the SEC for the year that ended December 2017.
While Softbank pumped a massive $2.5 billion into Flipkart, eBay too invested $500 million in the Indian firm alongside picking up additional stake in exchange for its India unit. eBay said that it held 5.44 percent stake in Flipkart, which cost it a total of $725 million. eBay had participated in a $1.4-billion funding round alongside Tencent and Microsoft.
Since the failure of its merger with Flipkart, Snapdeal has languished and is out of the running for the top spot in India’s e-commerce sector.
Paytm, which is backed by Alibaba, has filled that position after it spun out its e-commerce division Paytm Mall.
Snapdeal reported a 40 percent drop in its revenue at Rs 9.03 billion for the fiscal year 2016-17 according to documents the company filed with the registrar of companies (RoC). Since then, the company is said to have degrown even further, shrinking its operations to cut cost and firing majority of its workforce.
Now, the company is looking at selling its logistics unit Vulcan Express to retail major Future Group in a deal that is expected to fetch it Rs 500 million. It has already sold its payment arm Freecharge to Axis Bank for Rs 3.85 billion in July last year.
Source: Business-Standard