Flipkart is planning to make major spending cuts. In a board meeting held last week, CEO Kalyan Krishnamurthy was instructed to reduce company expenses by about 50%.
This move comes as Flipkart prepares for its Initial Public Offering (IPO).
The company is also considering shifting its holding company from Singapore to India, according to people familiar with the matter, as reported by Moneycontrol.
Current Expenses at ₹340 Crore Per Month
At present, Flipkart spends around ₹340 crore ($40 million) each month. Walmart, the U.S. retail giant, acquired Flipkart a few years ago, and ever since, the company has been aiming to go public.
The board now wants monthly spending to drop to ₹170 crore, and this reduction is expected to be targeted in the upcoming quarters, a source said on condition of anonymity.
Cash Burn Target Set at $250 Million Per Year
In the startup world, money spent on operations is known as cash burn. It shows how long a company can keep going without raising new funds.
A lower cash burn means better financial health. Flipkart’s CEO has been told to bring the annual cash burn down to $250 million.
Push into New Business Despite Cost Cuts
This directive comes even as Flipkart is investing in new business ventures, especially in its quick commerce arm, Flipkart Minutes.
However, the company did not respond to queries sent on April 21 regarding these developments.
Flipkart had earlier announced plans to open 500 new dark stores within 8 months, which would require significant investment. These stores are essential for fast delivery, a growing sector in India.
Competing with Big Players
Flipkart Minutes is competing with major quick delivery services like Blinkit (Zomato), Zepto, Swiggy Instamart, and Tata BigBasket.
The board’s push to cut costs has put extra pressure on the CEO. On one hand, Flipkart wants to cut spending ahead of the IPO, and on the other, it aims to expand aggressively in new business areas.
A source revealed that the company is already making efforts to reduce spending.
For example, it shut down its pharmacy business, Flipkart Health+, a few months ago. It is also downsizing some of its core business areas to control costs.
