Foxconn Technology Group writes off $40 million investment in Snapdeal
Indian e-commerce firm Snapdeal continues to struggle in the e-commerce market. After suffering losses last fiscal, one of its investors, FIH Mobile, the investment firm of Foxconn Technology Group, has written off its $40 million investment.
The e-commerce major has struggled to revive its fortunes in India's competitive e-commerce market led by high spending firms like Flipkart, Amazon and Paytm Mall.
Snapdeal made a net loss of 4,647 crore rupees (approx $699 million) during the 2017 financial year and recorded a 13 percent decrease in revenue to 1,291.3 crore rupees (approx $194.1 million).
Investors in Snapdeal feel that the capital infused in the e-commerce firm cannot be recovered amidst continuous valuation markdowns.
Last year, FIH Mobile stated that it had undertaken an impairment loss of $160 million and now by writing off the remaining $40 million the company has said that the entire $200 million investment in Jasper Infotech(owner of Snapdeal), first announced in September 2015, cannot be recovered.
“As the recoverable amount of the investment in Jasper Infotech is minimal, the Group decided to make a further $40 million impairment loss as on 31 December 2017. As a result, JIPL represented no more shares of the Group’s total assets as on 31 December 2017,” the FIH 2017 annual report stated, according to an Economic Times report.
FIH has estimated that the recoverable amount of its investment in Jasper Infotech is $3 million, with the investor citing the failed merger between Flipkart and Snapdeal as being one of the causes behind its decision to record $160 million impairment, the report added.
With investors shying away from the troubled e-commerce firm, Snapdeal is offloading its other services and raising funds to keep its newly launch 2.0 model working. Snapdeal recently sold its subsidiary Unicommerce to Infibeam for Rs 120 crore (approx $18 million).
Snapdeal had earlier sold its payment services unit Freecharge to Axis Bank for Rs 385 crore (approx $57.8 million) last year and its logistics arm Vulcan Express to Future Supply Chain Solutions for Rs 35 crore (approx $5.3 million).
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