SoftBank, Alibaba, Foxconn bet $500 million more on Snapdeal

Online marketplace Snapdeal has raised $500 million (about Rs 3,269 crore) in a fresh round of funding from a clutch of investors led by Alibaba Group, Foxconn and SoftBank. Existing investors Temasek, BlackRock, Myriad and Premji Invest also participated in the latest 

funding round, Snapdeal said in a statement.

The company had raised more than $1 billion, from investors including Softbank ($627 million) and iconic business leader Ratan Tata (personal investment).

As per market estimates, the new round would value the city-based firm at about $4-5 billion. “We see this milestone as a significant endorsement of Snapdeal’s strategy and commitment to <g data-gr-id="64">create</g> <g data-gr-id="59">life changing</g> experiences for millions of small businesses and consumers in India,” Snapdeal Co-Founder and CEO Kunal Bahl said.

He added, with global leaders like Alibaba, Foxconn and SoftBank supporting the company, its efforts towards building India’s most impactful digital commerce ecosystem will be propelled further, enabling it to contribute towards creating a Digital India. Snapdeal, founded in 2010, has more than 1,50,000 sellers on its platform with over 15 million products and a reach to over 5,000 towns and cities across the country. PE firms and angel investors are aggressively funding <g data-gr-id="65">start ups</g> and internet-led businesses in India, targeting higher returns in the years to come.

Rivals Flipkart and Amazon have also committed to <g data-gr-id="60">invest</g> about $8 billion over the next few years in India, where eCommerce is growing at a blazing pace, driven by affordable smartphones and increasing internet penetration.

Recently, Foxconn founder Terry Gou said that India is a key market this year for his group. SoftBank, too, has been aggressively investing in India acquiring <g data-gr-id="55">stake</g> in <g data-gr-id="56">internet</g>- led businesses like Snapdeal, Ola and OYO Rooms.

Meanwhile, China’s Lenovo has started making smartphones in India through contract manufacturer Flextronics, as it looks to cut cost to take on <g data-gr-id="66">competition</g>. The Flextronics’ unit at Sriperumbudur near Chennai has already started rolling out two of Moto E smartphone’s 4G variants and will start making another 4G device Lenovo K3 note, soon.

The 40,000 square feet plant is the first to rollout both Lenovo and Motorola brands. Lenovo had acquired Motorola last year. The factory currently has a capacity of making 6 million smartphone units. The company said that both Lenovo and Motorola will have separate manufacturing lines at the same facility which will house 1,500 employees.

The move follows Foxconn Technology beginning production of smartphones in the country for Chinese brands including Xiaomi and OnePlus after the government raised import tariffs to attract investment in manufacturing.

Lenovo India Chairman and COO, Asia Pacific Amar Babu said that the company expects its partner to source about 30 per cent components locally. “We are talking to <g data-gr-id="73">government</g> to improve <g data-gr-id="74">availability</g> of components locally to improve the total value of devices.” He said the phones produced in the plant is focused mainly on serving the Indian <g data-gr-id="72">market,</g> while the company has no immediate plans to design and develop phones specifically for the country.

“Outside China, this is the only facility where both Lenovo and Motorola smartphones are being manufactured,” Babu said. The idea is to integrate the supply chains of Lenovo and Motorola for manufacturing, even though the two will remain distinctly different brands, he added.

Lenovo has a plant in Pondicherry which manufactures ThinkPads and personal computers. Bubu further said, “The Indian government’s thrust on ‘Make in India’ has opened up a plethora of opportunities for organizations looking to conduct business in India.” Foxconn, the world’s biggest contract manufacturer of electronics goods including for Apple Inc, has announced plans to set up as many as 12 factories in India. Last week, Xiaomi announced <g data-gr-id="70">start</g> of assembling its <g data-gr-id="67">Redmi</g> 2 Prime smartphone at its new factory in <g data-gr-id="68">Vishakapatam</g>. Xiaomi is still sourcing its materials for <g data-gr-id="69">Redmi</g> 2 Prime from China.

Also, Micromax co-founder Rahul Sharma’s Yu Televentures and Xolo’s Black brand of smartphones have announced similar plans. “Lenovo is not new to manufacturing in India. We recognised the potential of India and we invested in PC manufacturing several years ago. “Lenovo’s investment in the new manufacturing plant represents the potential we see in the Indian market and our <g data-gr-id="61">long term</g> commitment to our customers,” said Chen Xudong, President MBG Group, Lenovo and Chairman Motorola Mobility Operating Board.

In the past ten years, “our brand has grown manifold in India. We are excited to expand our presence and tap into India’s competent talent pool that will enable us to develop cutting-edge products for our customers across the world”, 

he said.