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Arvind Internet posted a loss of Rs 11.23Cr in Q3FY18; will invest Rs 15-18Cr in FY19

Arvind Limited’s e-commerce business, Arvind Internet posted revenues of Rs 1.82 crore for the quarter ended December 31, 2017 (Q3FY18), which was a marginal decline from Rs 1.85 crore in the previous quarter, but was up 8.3% from Rs 1.68 crore revenues posted in the same quarter last year. In Q1FY18, Arvind Internet had reported revenues of Rs 1.66 crore. So, for the nine-month period till the end of Q3FY18, Arvind Internet posted revenues of Rs 5.33 crore.

However, the segment posted losses of Rs 11.23 crore for the quarter, which was a slight improvement from the Rs 14.20 crore losses posted in the previous quarter, and less than half of the Rs 26.35 crore losses reported in Q3FY17. In Q1FY18, the segment had reported losses of Rs 16.80 crore. So, for the nine-month period till the end of Q3FY18, the segment posted losses of Rs 42.23 crore.

E-commerce business remains subdued

While answering an analyst question, during the earnings call, regarding investments into Arvind Internet, the company’s CFO Jayesh Shah said that:

On cash basis negative investment of about Rs 8 crore (was made) this quarter, compared to that it was Rs 23 crore in Q3 last year. So, it has sharply come down and we believe that it will further go down in Q4 and it will stabilize at Rs 15 crore to Rs 18 crore for the whole of next financial year.

Note that during the company’s Q1FY18 earnings call, while answering a question about the amount of loss the company had budgeted for its e-commerce business, Shah had said that they were “looking at almost 60% of what we spend last year (FY17). And we believe that next year it should be a very minuscule amount not warranting a separate disclosure.” In regards to the expected investment into the e-commerce business in FY18, he had said that “we expect that this year we should be within about $6 million to $7 million as compared to about $10 million last year.

At the end of FY17, the company had said that investments in the e-commerce business will reduce by 20-25% in FY18. This was in contrast to the optimism Shah had exuded previously. He had said that Arvind Internet was expected to post a loss of Rs 70-72 crore during FY17, but predicted that losses would reduce to Rs 10-15 crore in FY18, “based on the revenue that may come in”. “…the traction is very good and very encouraging,” he had said then, “though financial numbers may not suggest that. I think on all parameters, be it the number of orders that are hitting, the sale that it is doing, all of that are very encouraging and I think all the parameters that we had or milestones that we had fixed internally are coming good.”

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Revenues and losses more than doubled from FY16 to FY17

Note that Arvind Internet had reported losses of Rs 88.87 crore in FY17, as compared to losses of Rs 22.92 crore in FY16. The segment’s revenues for FY17 had stood at Rs 15.13 crore, more than double the Rs 6.39 crore revenues reported in FY16.

Arvind Limited’s capital expenditure on Arvind Internet in FY17 had stood at Rs 43.43 crore in FY17, up from Rs 38.24 crore in FY16.

Arvind Internet operates the omni-channel platform NNNow.com, which was launched in May 2016, and it also owns Creyate.com, which was launched in August 2014.

Download: Financials | Transcript Q3 | Transcript Q1

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