To maintain its steady cashflow, homegrown e-commerce marketplace Flipkart has received an extended working capital credit line of Rs 375 crore from Axis Bank. While the credit was extended in March earlier this year, Flipkart entered into an agreement last month.
This credit line from Axis Bank will surely provide breathing room to the startup. It will also help Flipkart to maintain smooth cash flow during the upcoming festive season.
According to the RoC filings, Flipkart had previously availed Rs 650 crore from Kotak Mahindra Bank, a loan which was later increased to Rs 820 crore. It had also secured Rs 300 crore credit line from HDFC Bank, which was increased to Rs 453 crore.
For those who are unaware, a credit line is a pool of money that is available for borrowing. It is a flexible loan to maintain cash flow and are majorly utilised to meet the working capital needs of a business.
In April this year, the Bangalore-based startup a massive funding round from giants like Tencent, Microsoft and eBay. The company has a cash burn rate of Rs 384 crore to Rs 416 crore per month.
The high cash burn rate for the startup is due to its efforts to thwart competition from rival Amazon. In line with that, Flipkart has been aggressively offering discounts and cashbacks to customers.
While Flipkart’s efforts to acquire struggling homegrown startup Snapdeal didn’t work out as planned, but it may receive the backing of SoftBank, which was the reason Flipkart was pushing for the merger deal with Snapdeal.
SoftBank founder Masayoshi Son has said that the Tokyo-headquartered conglomerate is still “engaged” with homegrown ecommerce firm Flipkart.
If Flipkart gets funding from SoftBank, which is also a majority investor in Snapdeal, Flipkart won’t have to worry for the funding for a long time. As per the reports, SoftBank could invest around Rs 9,600 crore to Rs 12,800 crore.