SoftBank’s India losses at $1.4 billion on Ola, Snapdeal

The losses compare with a gain of $1 billion (¥114.377 billion) in 2015-2016. SoftBank is also invested in Oyo Rooms.

By: ENS Economic Bureau | New Delhi | Published: May 11, 2017 1:42 am
 Snapdeal, Ola, SoftBank Group Indian investments, SoftBank Snapdeal investment, SoftBank Ola investment, SoftBank losses, Oyo rooms SoftBank, Oyo rooms profit, Economy news, Indian Express Softbank Group has incurred upto .4 billion on investments in Snapdeal and Ola. (File Photo)

Japan’s SoftBank Group on Wednesday said it had incurred losses of $1.4 billion (¥160.419 billion) on investments in e-commerce player Snapdeal and taxi aggregator Ola in the period to March 2017. The losses compare with a gain of $1 billion (¥114.377 billion) in 2015-2016. SoftBank is also invested in Oyo Rooms.

The multinational corporation with a focus on telecommunication and e-commerce said in its annual report that expenses of $77.63 million had arisen from the resignation of Nikesh Arora from his position as director. These had been included in “Reconciliations” for the year.

The statement comes on the same day as the Tokyo-headquartered company reported a 13 per cent jump in full-year net income, to ¥1.43 trillion for the 12 months ended March 31 that topped analysts’ estimates and was driven, primarily, by cost cuts and an improved performance by its US-based wireless business Sprint.

SoftBank first came on board as an investor in Snapdeal in August 2013, when it invested about $75 million in the e-retailer. In all, the Japanese investment firm has infused close to $800 million in the company. However, with losses spiralling, Snapdeal is strapped for cash and SoftBank is now reportedly looking to sell the business to Flipkart.

ANI Technologies, which runs Ola, reported revenues of Rs 758.23 crore in 2015-16 and a loss of around Rs 2,313.7 crore.

Further explaining the cause of the losses, SoftBank announced that it recognised loss on valuation of shares of subsidiaries and associates including STARFISH I, an intermediate holding company which owns preferred shares in Snapdeal, of $1billion (¥114.059 billion), in 2016-2017.

“Highly competitive e-commerce market in India has made a trend of the company’s business performance lower than initially anticipated. The situation caused a material decrease in net asset value of STARFISH I PTE as of March 31, 2017,” the company explained in a separate filing on its website. According to the filings with the registrar of companies (RoC), Snapdeal had Rs 1,072.2 crore as cash and bank balances as on March 31, 2016. In an email a SoftBank spokesperson, said, “The valuation of our financial investments are frequently adjusted upwards or downwards due to accounting policies, currency fluctuations and market dynamics…”

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