Zomato to Soon Add Grocery to its App, Invests in Grofers

Food aggregator Zomato has witnessed a revenue plummet. The brand is soon intending to launch a grocery section on its app. It had recently made a big investment in grocery e-tailer Grofers. Zomato, which is launching its IPO next week, reported operating revenue of Rs 1,993 crore for the year ended March, down 23.5 percent from Rs 2,604 crore in the year before. Expenses nearly halved to Rs 2,608 crore, from Rs 5,000 crore.

Akshant Goyal, chief financial officer, says, “Food delivery business was hit in the first wave of Covid due to fear of virus and surface transmission. The fear of surface transmission has gone away and we have delivered crores of orders in the last 18 months without even a single case of transmission through food delivery.”

The company’s average order value (AOV) has been steadily increasing – even through 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 is a large opportunity and is in a nascent stage right now.

He further adds, “We are actively experimenting in this space and recently invested $100 million for a minority stake in Grofers with the idea of getting more exposure to that space. We are in the process of rolling out a grocery delivery marketplace on our platform on a pilot basis.”

Zomato’s shares will be listed on the stock exchanges on July 27. The issue is priced at Rs 72-76 per share. Gupta said the company increased the size of the offering to Rs 9,375 crore, from the previously planned Rs 7,500 crore, 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 positive unit economics with a contribution margin of 23 per order on average in Q3 of last year, up from a negative 30.5 margin a year prior to that. The company said it is making money per order on average. This has been possible due to increase in commissions.

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