While Snapdeal is getting ready to pivot to a new model after its merger with Flipkart fell through, its investor FIH Mobile, a subsidiary of Taiwanese electronics major Foxconn, has written down 80 per cent of its $200 million investment in the company.
The development was first reported by Economic Times, citing regulatory filing information by the Hing Kong based company. FIH said that it has recognised an impairment loss of $160 million related to its investment in Snapdeal, run by Noida-based Jasper Infotech Private Limited (JIP).
FIH Mobile, which manufactures all non-Apple handsets for Foxconn, had invested about $200 million in Snapdeal for around 4.07 per cent stake in the company. The investment was done when Snapdeal raised $500 million in a new funding round, valuing the company at around $5 billion.
At the time of the investment, Snapdeal was a key player in the Indian e-commerce market, but it gradually lost significant market share to homegrown Flipkart and US-based Amazon, thanks to its aggressive strategy.
FIH had a massive non-operating loss because of its investment in Snapdeal. It posted a net loss of $196.6 million for the period, compared with a net profit of $21.4 million a year earlier.
In a statement, the company said, “The post-impairment $40-million equity investment in JIPL represented 0.55% of the group’s total assets as of June 30, 2017.” The impairment weighed down FIH Mobile’s results for the six months ended June 30.