US retail major, Walmart on Tuesday expressed disappointment with the Indian government's decision to implement the changes in rules for ecommerce firms but was hopeful for a "collaborative regulatory process" for a level playing field.
The Bentonville-based retailing major last year had bought 77 percent stake in homegrown ecommerce major Flipkart for about $16 billion (Rs 1.05 lakh crore).
During the fourth-quarter earnings call, Doug McMillon, president and chief executive officer, said Walmart was continuing to work with the government on pro-growth policy, “Things in India have been disappointing, but it has not shaken our confidence.”
Tightening norms for ecommerce firms having foreign investment, the government, from February 1, barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price.
Last month, a Morgan Stanley report had said that Flipkart losses may rise 20-25 percent under the new regulatory framework, which would amount to a 1.5 percent hit to Walmart's 2019 estimated earnings per share (EPS).
When asked about the impact on Flipkart’s topline from the regulatory changes, McMillon said the business has behaved according to what the company thought it would be (after the policy changes).
According to McMillon, future investments in India will be linked to Walmart's track record this year, "We remain optimistic on the given size of the market and low penetration of ecommerce in India."
“Flipkart is an ecosystem including PhonePe, Myntra and Jabong. It’s not just one ecommerce business in a traditional sense. We have forecast for all of this,” he added.
Walmart chief financial officer Brett Biggs, however, said the company is still excited about the potential of ecommerce in India.
“Ecommerce growth in India still as true today as six months ago. Reasons we were excited about the market are still there,” Biggs said.
Walmart today delivered a quarterly report that beat expectations on profit and revenue, and e-commerce sales surged during the critical holiday period.
First Published: Feb 19, 2019 9:33 PM IST
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