Presented by Group 8

Rishi Tekchandani 41
Shristi Gupta 44
Smriti Mehta 46
Sneha Nair 47
Soniya Golechha 48
Srashti Baheti 49

Sectoral Conditions Pre-Deal

The Indian e-commerce market was worth $ 12.6 billion, in 2013
India had the potential to double its economic contribution via
Internet, from 1.6 percent GDP at present to 2.8 and 3.3 percent
by 2015

About the Buyer Company

The Flipkart Journey

Shareholding Structure

Financial Highlights

About the Target Company

Date of Establishment: February 2007

Founders: Mukesh Bansal, Ashutosh Ashutosh Lawania, Raveen Sastry and

Vineet Saxena

Seed Money: Rs. 50 lakhs

On-demand online personalization platform forconsumer products, which

allows users tofindand create personalized and creative merchandise

In June 2010, Myntra launchedan online brand store solution for corporates
called Brand Stores.

In June 2012, Myntra had a customer base of 3 million and 400,000 visitors on a
daily basis. It also claimed to have21,000 unique products across more than
350 brands anddelivered products in 10,000 pin codes across more than 1,200
towns in the country.

Shareholding Structure

Financial Highlights

Reasons of deal

Fair
valuation

Strengthen
position

Leadership
in Fashion
vertical

Grow in
every
category

Timing

Deal Attractiveness
Calibrated aggression for survival
Large e-commerce oriented country
Build large business out ofIndia& M&A
ESOPs matter
Clear message to Indian Rupee Investors
Messageto Indian Government- Open up multibrand FDI

Price paid by the Flipkart: $350million.

Share swap process: Tiger Global Management, Accel Partners and Sofina Capital get more shares
in the merged entity.
Price to revenue multiple: 10X times the revenues.

Myntra

Flipkart

No. of registered users

8million

18million

No. of products on stock

60,000

10 million books

Annualized revenues

1,200crores(approx.)

3,355crores(approx.)

Myntra attained 45% of market share in fashion lines.

Group No. 600 brands making effective sales 1.5billionUSD
The combination added

SYNERGY OF
THE DEAL
SYNERGY
Cost optimization by
using common
resources as they
have common
vendors S
Operational synergy
by increasing
market share and
becoming more
dominant
Increasing sales
through cross selling,
up selling i.e. selling
apparel higher profit
margin

FLIPKART
Electronics,
books

MYNTRA
Apparel
(>50%)

Deal was an
added vertical to
the line of
business
Apparel business expected
to grow from 3 billion to
50 billion hence a
prospective sector of
business
Flipkart merger a growth
merger for Myntra
Launch of first online personalized
style service, more brands under
private labels and foraying into
premium designer collection

Synergies

For Flipkart, setting up a huge fashion vertical means boosting margins, because
fashion has the highest margins - 35 to 40 per cent - among all products sold online.

Flipkart announced at the time of deal it will invest $100 million in Myntra over the
next 12 to 18 months.

Big advantage for Myntra, which has raised $125 till then, will not have to worry
about raising funds for further growth.(Acquisition of jabong).

Myntra leverage Flipkart's logistics network. Flipkart ships books to almost all of
India's 21,000 PIN codes, and covers more than 100 cities for its entire product
portfolio of 20 categories.

Myntra reaches 30 cities with its own logistics network, Myntra Logistics, and around
9,000 PIN codes via third-party logistics companies.

Flipkart will bring in its capabilities in customer service and technology. Both
companies will also net customers that have shopped on both portals - about 80 per
cent of the country's online shoppers have shopped on either Myntra or Flipkart.

Sectoral Conditions Post-Deal

The retail sector is showing a promising trend of 11% CAGR, growing

from an estimated size of USD 600 Billion now to USD 1 Trillion in 2020.

Total e-Commerce spend in India accounts for less than 2% of the total
retail spending

e-Commerce industry is expected to form the largest part of the Indian

Internet market with a value of approximately USD 100 Billion by 2020

Evolving e-Commerce ecosystem

Mergers & Acquisitions (M&A) Like

any high-growth, the e-Commerce
industry has witnessed
consolidation in the past 2-3
years.

Total 259 M&A deals worth USD

2.43 Billion pertained to the eCommerce industry.

PE/VC investments reached an alltime high in 2015 at USD 20

Billion of which 70% was in etailing.

E-tail Market in India

e-tail revolution started officially around two to three years back by Ebay
and Amazon

As per comScore data, Amazon India has received 23.6 million unique
visitors, while the number was 23.5 million for Flipkart and 17.9 million
for Snapdeal in May 2015.

e-tail business in India is expected to grow in the backdrop of fast

growing internet penetration and developing infrastructure like payment
and delivery systems.

Resulting entity performance Post-deal

Website

Mukesh Bansal,
former Myntra
CEO, head of
commerce and
advertising
platform(flipkart),
has resigned
Chief business
officer Ankit
Nagori, has also
quit Flipkart

Management
restructuring

Acquiring Merchants

Outsourcing
employees

The growth on the

mobile platform has
been rapid because
fashion shopping is
quite impulsive

It had 30,000
sellers, which rose
to 50,000 by
October and 90,000
in May this year

Flipkart transferred
more than 300
middle and lowerlevel employees to
Serco

Life after the merger

Till March 2015, Flipkart had infused over Rs 1150 crores in to Myntra
Revenue
Flipkart registered a
revenue of Rs 10390
crores which is 3 times
the previous year
Myntras revenue
increased from Rs 427
crores to Rs 758 crores. A
growth of 77%

Losses
Flipkarts losses also
trebled to a huge Rs 2000
crores compared to Rs 715
crores the previous year.
The HIGHEST among all
competitors

Myntras losses grew 4

times at Rs 740 crores
against Rs 173 crores the
previous year

Reasons for the losses

Heavy discounting-Flipkart could post between 35-50% of its sales as

operating loss due to its high logistics cost and discounting

High promotional expenses- These almost doubled to Rs 171 crore from Rs 90 crore
the year before for Myntra, while revenue grew only at 77%.Also, these expenses
are very recurring in nature which is a big worry!!

Delivery infrastructure

Boosting technology

Building warehouses

Aggressive hiring(Employee benefit expenses rose 3 fold to Rs 476 crores)

for Flipkart

Jabongs acquisition- A big positive

Myntras acquisition of Jabong from Global Fashion Group has created

Indias biggest shopping destination

Jabong is one of India's major fashion multi-brand e-store with more than
1,500 on-trend international high-street brands, sports labels, Indian
ethnic and designer labels and over 150,000 styles from over a
thousand sellers.

This acquisition further cements the Flipkart group's position as the

undisputed leader of Online fashion in India

Going for growth, not profitability

Flipkart expects sales to surge six fold for 2016 year, according to head
of commerce Mukesh Bansal.

According to him, the company was on course to sell goods worth $10
billion (Rs 65,000 crore) in fiscal 2016.

Flipkart is also looking to double its seller count by March from 60,000
now in an effort to convert itself into a pure marketplace similar to rival
Snapdeal

This way, Flipkart is trying to build a base of loyal customers and

concentrating on gaining the market share.

Whether this will lead to a profitable

organization in the years to come, is a question
that remains unanswered!!!

Future course of action