In its annual report for FY17, the SoftBank Group said it has recorded loss from Indian investments to the tune of Japanese yen 160,419 million ($1.4 billion). These include e-commerce major Snapdeal and cab aggregator Ola.
SoftBank Group has also released a statement as part of its annual results for FY17 recognizing loss on valuations of shares of subsidiaries and associates as ‘special loss’ of ¥114.059 million (approx. $1 million)
As per the company’s statement, “The loss represents impairments of SoftBank’s investments in subsidiaries and associates, including Starfish I Pte Ltd.”
Starfish is the Japanse investor’s intermediate holding company, which owns preferred shares in Jasper Infotech, which runs Snapdeal.
“Highly competitive e-commerce market in India has made a trend of the company’s business performance lower than initially anticipated. This situation caused a material decrease in net asset value of Starfish as of March 31, 2017, and therefore SBG impaired the carrying amount of its shares in the company to the amount equivalent to its net asset value,” the statement says.
What this means is that, having recorded a loss of nearly one million dollars, the company will be impairing the shares of Snapdeal and writing down its valuation by the loss amount.
It further said that the changes in the fair value of Jasper Infotech have been recorded on a quarterly basis as gain or loss on financial instruments at fair value through profit or loss on the income statements (FVTPL). And hence, there is no impact of this loss on valuation of shares of subsidiaries and associates on the consolidated financial results, SoftBank said.
SoftBank has been orchestrating the sale of Snapdeal to rival Flipkart over the past few weeks. In holds over one-thirds of Snapdeal having invested nearly $900 million in the ecommerce major. However, Snapdeal has been struggling with a cash crunch in the light of tough competition in the ecommerce space in India.
SoftBank has been pushing for Snapdeal’s sale, which also has investors Kalaari Capital and Nexus Venture Partners on board. As per several media reports, Nexus’ go-ahead is awaited to cement this deal.