Softbank May Invest Whopping $3 Bn in Paytm Mall, Thanks To Flipkart

Softbank May Invest Whopping $3 Bn in Paytm Mall, Thanks To Flipkart

The department now is going through the Section 9 (1) of the Income Tax law, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like Singapore and Mauritius, could be available for foreign investors selling stakes to Walmart.

"Despite this deterioration, the acquisition is credit positive because it provides immediate scale in India's burgeoning retail e-commerce sector and we expect that a combination of increased cash flow and debt reduction will push the RCF/net debt ratio back above our 35 per cent", said Moody's in a report.

Softbank: Japan's SoftBank is expecting returns of about United States $4 billion as part of the Walmart-Flipkart transaction. However, he said if SoftBank decides to stay put, it will bring more equilibrium to the Flipkart board. It now holds over 70% stake in Flipkart. According to reports, SoftBank is likely to exit Flipkart as it already made profit from the ecommerce major.

"In line with the Indian government's vision to promote digital inclusion, we are committed to transforming the lives of hundreds of millions of Indian consumers and merchants by providing them digital access to a broad array of financial services, including mobile payments", SoftBank Group Chairman and CEO Masayoshi Son said, PTI reported. While it has pumped in close to $2 billion into Indian startups like Snapdeal, Ola and in last few years, it has also written off a significant portion of that on account of loss in valuation.

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SoftBank acquired Flipkart shares less than a year ago for $2.5 billion, which now have a net value of $4 billion.

Other deciding factors would be Son's relationship with Walmart and that SoftBank likes to be a long-term investor, sources said, adding the Japanese conglomerate is very bullish on India and sees huge opportunities for growth of investment. Barely days after Walmart announced its plan to buy Flipkart, online marketplace eBay said it will end its strategic partnership with the latter and relaunch eBay India with a differentiated offer to focus on cross-border trade. Singapore-registered Flipkart holds a majority stake in Flipkart India.

The right to buy additional stake could become crucial in Walmart's overall scheme of things at Flipkart after SoftBank's reversal in plans.

"In the Walmart-Flipkart deal, Section 9 (1) will apply as the assets of Flipkart Singapore are substantially based in India and hence the sellers would be liable to pay capital gains tax", Titus & Co Managing Partner Diljeet Titus opined.