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    ShopClues redials Flipkart for a potential sale

    startup | IST

    ShopClues redials Flipkart for a potential sale

    Backed by common investor Tiger Global, beleaguered e-commerce company ShopClues has re-initiated potential sale talks with Flipkart, two sources aware of the development told CNBC-TV18. This comes months after ShopClues’ talks with Snapdeal fell through over certain liabilities and litigation that had come up during the due diligence.
    ShopClues and Flipkart had held similar talks for an acquisition in early 2017, with sources claiming that the valuation discussed was $350 million. While the details of the valuation being discussed in the current talks is not known, it is likely to be much lesser than the earlier figure given ShopClues' falling orders.
    ShopClues has been struggling over the past year and its valuation has dropped from a billion dollars three years ago. The e-commerce company may face obstruction from Walmart, as per sources. This is mainly because ShopClues is reported to be facing an ED probe which was also one of the reasons Snapdeal dropped discussions with the company.
    Walmart and  Flipkart said they will not comment on speculations.  Shopclues CEO Sanjay Sethi refused to comment on discussions with Flipkart but categorically denied any ED investigation on the company and the amount of liabilities that have been reported.
    The due diligence on ShopClues commissioned by Snapdeal and done by EY and PwC pointed to liabilities of around $40-50 million, as per sources. CNBC-TV18 had reported in July that ShopClues had less than Rs 10 crore in the bank after its talks with Snapdeal failed to fructify.
    The company has taken to cutting costs by laying off people and the team size is down to less than 300 from 500 over the past few weeks. ShopClues has also been delaying salaries of senior management employees, sources added.
    "In the last two years ShopClues has continued its journey to enable MSMEs & service tier 3/4 consumers from it platform. During this period we have reduced our losses by 85 percent via cost reduction and contribution expansion. Our recent restructuring allowed us to leverage our technology to reduce operational costs and we have out placed about 15 percent of our workforce, mostly in operations," the company had said in a statement.
    ShopClues had reduced losses from Rs 210 crore in 2017-18 to less than Rs 45 crore in 2018-19.  The company, founded in 2011, has raised over $250 million from Tiger Global, GIC Singapore, Nexus Venture Partners and Helion Ventures.
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