Zomato plans grocery rollout, invests in Grofers - Business2Business

BENGALURU: Food aggregator Zomato said it is recovering well after the year the pandemic hit year, which saw its revenues plummet. It said that the first quarter of this fiscal year was better than the same period last year. The company also said that it will soon launch a grocery section on its app. It recently made a big investment in grocery e-tailer Grofers.

Zomato, which is launching its initial public offering next week, reported operating revenue of Rs 1,993 crore for the year ended March, down 23.5% from Rs 2,604 crore in the year before, according to its red herring prospectus.

Partly for this reason, the losses also decreased to Rs. 822 crore from Rs. 2,362 crore. Expenses nearly halved to Rs 2,608 crore, from Rs 5,000 crore.

The food delivery business was hit in the first wave of Covid due to fear of the virus and its surface transmission. "The fear of surface transmission has decreased and we have delivered crores of orders in the last 18 months without even a single case of transmission via food delivery," said chief financial officer Akshant Goyal. The average company order value (AOV) has risen steadily, even during the pandemic. It touched

Rs 395 in the fourth quarter of the last fiscal, from Rs 287 a year before that.

On grocery, Goyal said it's a great opportunity and is in a nascent stage right now. "We are actively experimenting in this space and recently invested $100 million in a minority stake in Grofers with the idea of having more exposure to that space. We are in the process of implementing the grocery delivery market on our platform on a pilot basis,” he added.

Zomato's shares will be listed on the stock exchange on July 27. The issue was priced at Rs 72-76 per share. Gupta said the company has increased the size of the offering to Rs 9,375 crore, from Rs 7,500 crore previously planned, due to the demand they saw from investors during roadshows. Info Edge India, one of the earliest backers, has halved its offer for sale from Rs 750 crore.

Zomato, which is backed by Info Edge, Alipay, Ant Financial, Tiger Global and Sequoia, said it has achieved a positive unit economics with a contribution margin of Rs 23 per order on average in Q3 of last year, up from a negative Rs 30.5 margin a year prior to that. The company said it makes money on average with every order. This has been possible due to increase in commissions.

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