Delhi-based Appario Retail Pvt Ltd, a wholly-owned subsidiary of the joint venture between Amazon India Ltd and Ashok Patni, the co-founder of Patni Computer Systems, has received Rs 140 crore ($21.85 million) from Frontizo Business Services Pvt Ltd, regulatory filings revealed.
Appario received this sum in two tranches this year—Rs 100 crore in November and Rs 40 crore in August, filings with the Registrar of Companies show.
The Amazon-Patni JV has been registered under Frontizo Business Services Pvt Ltd.
The funds come three months after it was reported that Amazon India and the Patni group scion are floating a joint venture.
E-mail queries sent to Amazon and Appario Retail did not immediately elicit a response at the time of filing this report.
In May this year, 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, which was incorporated in 2012, was earlier known as Aristotle Sales & Marketing Pvt Ltd. According to the company’s main objects in its memorandum of association, it 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 Amazon-Patni JV 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’s parent and Infosys’s co-founder Narayana Murthy’s Catamaran Ventures.
Industry experts and observers view these moves as part of Amazon’s strategy to meet regulatory compliance, while having operational control.
Regulations by the Department of Industrial Policy and Promotion 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, over 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.