Flipkart needs about $150 million from new investors in the next six to nine months even as bulge-bracket private equity firms remain wary of the online retailer's initial public offering plans in the US—crucial to making handsome return on investments.

PE giants like Bain Capital and Kohlberg Kravis Roberts could look at potential investment deal but demand clarity on Flipkart's ability to pull off a public issue, said bankers familiar with the matter. Two existing investors Accel Partners and Tiger Global are unlikely to pump more capital after $100 million follow-on investment earlier this year.

Flipkart would be running out of money unless big investors step in the next nine months. The poster boy of India's latest e-commerce wave is limiting cash burn and improving profitability, but that alone won't improve listing prospects.

"While there is appetite among US domiciled investors for high growth stories like Flipkart, recent negative experiences with offshore structures of Chinese tech companies will cause concern. Flipkart has to be a foreign domiciled (offshore structured) entity for US listing since Sebi regulations ask Indian companies to trade first on local bourses," said Praveen Chakravarty, CEO, Investment Banking and Institutional Equities, Anand Rathi Financial Services.

Chinese e-commerce engines which took the foreign domiciled route to US listing have seen their valuations plunge in the past one year. Flipkart with revenue topping $350 million has had negative gross margins till recently, but just slipped into 2-3% profit margins after expanding product catalogue. It wants to boost operating margins to 8-10% in the next one year.

Indian market regulator stipulates profitability norms for listing on local exchanges. Flipkart, which invested heavily into backend logistics as a business differentiator, has started controlling runaway costs and letting go some employees. It has more than 5,000 delivery men servicing 45,000 orders daily.

"We are a privately held company and hence are unable to comment on investments, margins or ongoing discussions with investors," said a Flipkart spokesperson in response to queries from his newspaper.

Last year, General Atlantic Partners walked away from Flipkart being unconvinced about the financial model. Promoters Binny and Sachin Bansal then turned to existing investors for a bail out deal. The absence of big PE investors in Indian e-commerce has been conspicuous with most firms managing to raise only follow-on investments from venture capitalists.

Bansals control about 37% of Flipkart equity, while the Accel Partners and Tiger Global together control 48%. Management holds the remaining 15%. This leaves Bansals with little room in discussing a large deal with PEs beating down valuation. Some bankers argue that Flipkart would opt for strategic sale with Amazon a likely acquirer if multi brand retail FDI is allowed.

"Most e-commerce start-ups follow 'the last man standing' approach in a potentially large and under penetrated market. But one cannot keep losing money on unit sales," said K Ganesh, a serial entrepreneur with investments in smaller rivals of Flipkart. Avnish Bajaj, managing director, Matrix India, explained that e-commerce in India has a lot going for but most customers are coming in because of the low prices, there are no loyal buyers.

"Raising money for the big players won't be an issue but it's the smaller ventures which will find it difficult," argued Bajaj whose fund has invested in Quikr. Anand Rathi's Chakravarty avers that Flipkart's fund raising hinges upon better clarity on its US listing plans.