20 January, 2016, Mumbai: One of the India’s online marketplace giants, Snapdeal is going through a rough phase. Recently, Enforcement Directorate has announced that it will be keeping a close eye on eight ecommerce sites including Snapdeal as the government body feels that these online companies are flouting the foreign investment norms of the country. Before the company can react to that, it has been hit by another blow and this time it’s the company’s revenue which has gone for a big toss. As per the company’s filing with the Registrar of Companies (ROC), its revenue graph has declined drastically in FY2015 and Snapdeal has suffered a loss of Rs 1319.29 cr which is five times than that of Rs 264.62 cr in FY2014.
Speaking on the loss, Rohit Bansal, Co-Founder, Snapdeal said, “Two-thirds of the company’s sales come from Tier II and Tier III cities. Promotion of our brand is very important in these areas so that we can allure more new customers.”
Financial experts suggest that the company has over spent its revenue on advertising and marketing and that has triggered the losses. In FY15, Snapdeal’s total expenses climbed to Rs. 2256.97 crore from Rs. 432.78 crore in the previous year, largely on the back of advertising & promotional expenses and discounts, reports indiainfoline.