Big relief for Grofers as daily orders jump 66 pct, but there is a catch

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New Delhi | Published: November 7, 2017 5:12:38 AM

After a rough 2016, hyperlocal-cum-e-grocer Grofers seems to be turning the corner with monthly losses steady since June.

Albinder Singh Dhindsa, Albinder Singh Dhindsa interview, interview of Albinder Singh DhindsaAlbinder Singh Dhindsa.

After a rough 2016, hyperlocal-cum-e-grocer Grofers seems to be turning the corner with monthly losses steady since June. Albinder Singh Dhindsa, CEO and co-founder, Grofers, said investment in infrastructure is one reason the business continues to lose money. “We are in the process of consolidating our warehouses, as bigger fulfilment centres are replacing the smaller ones,” Dhindsa explained. Dhindsa added the firm was scouting for some funds to help finance expansion plans. As per RoC filings and data from Tofler, at the end of FY16 Grofers had about Rs 463 crore in reserves and surplus. The company has seen a 66% jump in the number of daily orders to about 25,000 even as the order value has remained same at Rs 1,450. In December last year, the order value was close to Rs 1,000, while the average order value in July last year stood at Rs 750. Tiger Global and SoftBank-backed firm’s losses are around Rs 12 crore per month on revenues of Rs 16.3 crore. In June this year, the company was losing Rs 12 crore per month on revenues of Rs 11.7 crore. According to RoC filings and Tofler, Grofers India had reported a loss of Rs 225 crore on revenues of Rs 14.3 crore in FY16.

The company plans to invest around $14-20 million to build its private label business, of which $10-$15 million will be invested in the food vertical and $4-$5 million in the non-food business. Moreover, Grofers claims that private labels now contribute to 45% of its sale, compared to the 40% till June this year. Grofers currently sells staples such as lentils and vegetables under its private label brand, Best Value. According to Dhindsa, the company is in the process of expanding its private label brand to other categories including personal care such as hand-wash, soap and shampoo besides home care including toilet cleaners, floor-cleaners, bathroom cleaners, naphthalene balls, etc. The company will be launching frozen meat and chicken products. “In all, we will have 750 products, of which we will sell 22 products under personal care, while home care as a segment will have about 50 products. Products would be manufactured by third party manufacturer, with whom we have already tied up. Besides we have on-boarded poulterers for supply of eggs, chicken and other non-vegetarian items,” added Dhindsa.

It should be noted that in June this year, Grofers received the government’s nod for foreign direct investment (FDI) to undertake retailing of food products. Dhindsa said that the licence would be used to sell its branded products on its e-commerce website. Grofers had last raised fresh funds in November 2015. At that time, it received $120 million in fresh funds largely from Japan’s SoftBank. Other investors including Russian entrepreneur and venture capitalist Yuri Milner, Tiger Global and Sequoia Capital also participated in the round.

The company has set up a warehouse of 1 lakh square feet in size in Gurugram. At the same time, it has opened three collection centres in rural areas near cities such Mumbai and Bengaluru, where farmers can drop off their produce that is further transported to nearby warehouse. The firm now has in total 1,000 four-wheelers delivering goods within a day.

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