TV and online commerce company HomeShop18 has raised around $30 million from hedge fund OCP Asia and Network18, in what appears to be, and is being positioned as, a valuation defining fund-raising. According to the announcement, the fund raising of $15 million from OCP Asia and “a similar amount” from Network18 values the company at $330 million. Network18 will continue to hold around 51% in the company following this investment. Other investors in the venture include SAIF Partners and GS Home Shopping.
HomeShop18 is positioning itself as a virtual commerce business: across TV home shopping and on digital via homeshop18.com. The company claims a customer base of 6.1 Million, a portfolio of over 12 million SKUs across multiple product categories and a logistical reach of over
3,000 locations across India.
Last quarter, HomeShop18 had reported a 325% increase in revenues year-on-year: the company had said that their margins are looking better, and the TV business is now generating operating profits. In October last year, at our #NAMA Conference, Malhotra had said that the TV business was generating around Rs 2.5 to 3 crore in revenues, which was twice of its revenues generated through the company’s Internet operations.
A Couple Of Regulatory Situations
India’s Telecom Regulatory Authority of India had, last month, restricted advertising on TV Channels to 12 minutes per hour. We’re not sure of how this impacts channels like HomeShop18 and CJ Home Shopping, which are dedicated purely to home shopping…are these advertisements, or is this content?
Secondly, India’s FDI policy on e-commerce prohibits foreign investment in b2c multi-brand retail, and a part of HomeShop18’s business in e-commerce. We’d asked Malhotra about compliance issues at our #NAMA Conference, and he had said then: “We are one company that has an FDI approval. We started with a television channel, and you cannot launch a TV channel without a plethora of approvals. our structures are made in a manner which comply with every legality in the country, ensuring that everything is clean and legally compliant.” More in our interview here, including Malhotra’s answers to questions on Internet versus TV, and whether TV will fade away, and purchase patters across urban and rural India.