Amazon India’s authorized capital doubles to Rs16,000 crore


Mihir Dalal

Bengaluru: Amazon India has almost doubled its authorized capital to Rs.16,000 crore, exceeding its massive capital commitment of $2 billion made in July 2014 and indicating the company’s intent to splash whatever cash is needed to become the country’s largest e-commerce firm.

Amazon Seller Services Pvt. Ltd (Amazon India) increased its authorized capital from Rs.8,500 crore in February, documents with the Registrar of Companies (ROC) show.

The firm’s authorized capital was Rs.1,500 crore in July 2014, when Inc.’s chief executive Jeff Bezos promised it will invest as much as $2 billion in India over the next few years.

The authorized capital of a firm is the maximum amount of share capital that is allowed by the company’s charter and can be changed with shareholders’ approval. Typically, a greater number of shares are authorized than required, allowing the company to issue stock to raise capital when it needs funds.

Amazon didn’t respond to an email seeking comment.

Amazon India is stepping up its pace of investment to try and overtake local rivals Flipkart Ltd and Snapdeal (Jasper Infotech Pvt.Ltd), both of which are struggling to raise money.

Last week, India permitted 100% foreign direct investment in online retail of goods and services under the so-called “marketplace model”, legitimizing existing businesses of e-commerce companies such as Amazon and Flipkart. It also notified new rules which could potentially end discount wars between these companies.

Since Bezos committed $2 billion, Amazon Seller Services has already received roughly Rs.10,730 crore to splurge on discounts, advertising, hiring and other things, documents with the RoC show. This is apart from the company’s cash infusions in its logistics unit Amazon Transportation Services Pvt. Ltd and Cloudtail India Pvt. Ltd, Amazon’s joint venture with Catamaran Ventures.

Amazon is desperate to succeed in India, the last big e-commerce market in the world, after losing out in China to Alibaba Group Holding Ltd.

India’s e-commerce sales could reach $48-60 billion by 2020 from $4.47 billion in 2014, according to a UBS report.

Amazon’s massive investments have yielded immediate results. While Flipkart, Snapdeal and Amazon India haven’t officially released their latest sales figures, executives familiar with the matter said the three companies are neck and neck in the race for dominance of India’s e-commerce market.

The pace at which Amazon has caught up with Flipkart and Snapdeal, which launched several years before their American rival, has surprised experts and investors. Led by Amazon veteran Amit Agarwal, Amazon India launched only in June 2013 and successfully wooed tens of millions of Indian shoppers with low prices, wide product selection and fast delivery.

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