Delhi-headquartered Appario Retail Pvt. Ltd has received fresh funding of Rs 120 crore ($18.84 million) from parent Frontizo Business Services Pvt. Ltd, the joint venture between Amazon India Ltd and Patni Computer Systems co-founder Ashok Patni.
Appario Retail raised the above-mentioned sum by allocating 12 crore equity shares at Rs 10 apiece earlier this month. The fundraising effort was preceded by a hike in authorised share capital from Rs 200 crore to Rs 275 crore in December.
"There has been an expansion in the equity base of Frontizo Business Services Pvt. Ltd," a Patni Group spokesperson told VCCircle.
E-mail queries sent to Amazon and Frontizo did not immediately elicit a response.
The Times of India first reported this development, citing Ministry of Corporate Affairs documents sourced by paper.vc, a data and research platform.
Appario Retail is a wholly-owned subsidiary of Frontizo Business Services. It is a seller on Amazon's e-commerce marketplace.
The latest infusion comes less than a month after VCCircle reported that Appario Retail had received Rs 140 crore ($21.85 million) from Frontizo Business Services in two tranches last year.
Last May, Amazon Singapore, Patni LLC and Zaffre Investments had entered into a shareholding agreement. While Zodiac Wealth Advisors would have a controlling stake of 51% in Frontizo Business Services, Amazon and Zaffre Investments would hold 48% and 1% stake, respectively.
Appario Retail
Incorporated in 2012, Appario Retail was earlier known as Aristotle Sales & Marketing Pvt Ltd. According its memorandum of association, the company primarily deals in wholesale and retail, and acts as a reseller, distributor and stockist for all kinds of goods, services and merchandise.
It also provides a technology platform to service commerce transactions, including mobile and e-commerce for customer-to-customer and business-to-consumer domains.
The joint venture is similar to Cloudtail, which is one of Amazon’s larger seller partners. A step-down subsidiary of Amazon, Cloudtail is a joint venture between Amazon India’s parent and Infosys co-founder Narayana Murthy’s Catamaran Ventures.
Amazon's strategy
Industry experts and observers view these ventures as part of Amazon’s strategy to meet regulatory compliance while having operational control.
Regulations by the country's Department of Industrial Policy and Promotion (DIPP) stipulate that no single seller on an e-commerce platform can account for more than 25% of annual sales. Besides, if Amazon wants to expand aggressively, a control over its inventory and sellers will translate into better margins and customer experience.
In the US, more than 60% of Amazon’s sales come from its inventory, while third-party sellers account for the rest. As DIPP regulations do not allow for this, it suits Amazon to enter into JVs with larger players and operate on a proxy-inventory model to indirectly control sales and consumer experience.