Zomato invests over $100 million in Grofers

By: |
August 17, 2021 4:00 AM

The Competition Commission of India (CCI) had last week approved the deal. “Commission approves proposed acquisition by Zomato of approximately 9.3% stake in Grofers India and Hands on Trades,” the fair trade regulator had said in a tweet.

Total losses for Grofers increased by over 40% year-on-year to Rs 637.49 crore in the year to March 31, 2020. Revenue from operations, however, grew by a little over 135% y-o-y to Rs 165.27 crore in FY20.Total losses for Grofers increased by over 40% year-on-year to Rs 637.49 crore in the year to March 31, 2020. Revenue from operations, however, grew by a little over 135% y-o-y to Rs 165.27 crore in FY20.

Zomato has invested about $100 million in Grofers. Documents sourced from business intelligence platform Tofler showed that the Gurgaon-based food delivery firm has infused around $70 million (Rs 518 crore) into Grofers India and another $30 million (Rs 223 crore) in the e-grocer’s wholesale entity Hands On Trades.

The investment is understood to have valued Grofers at $1 billion, giving it the status of a unicorn.

The Competition Commission of India (CCI) had last week approved the deal. “Commission approves proposed acquisition by Zomato of approximately 9.3% stake in Grofers India and Hands on Trades,” the fair trade regulator had said in a tweet.

According to the filings made by Grofers, the investment is expected to give Zomato a 9.16% stake in Grofers India and a 8.94% stake in Hands On Trades. Grofers did not respond to FE’s queries.

Zomato’s investment in Grofers comes at a time when e-grocery services are witnessing heavy demand. The pandemic has nudged more people to take to online grocery shopping and analysts believe the trend is here to stay. Industry experts say that India had an estimated 154 million online transacting households as of CY20, with 130 million either already using e-grocery platforms or willing to try.

Tier two cities and beyond will be the next growth frontier for the segment players. Following the onset of the pandemic in March last year, Zomato had introduced grocery services on the app but discontinued it after the food delivery business got back in shape.

Zomato is actively looking at the e-grocery space which the company believes is a “large opportunity”. Last month, executives at the firm had said that the strategy behind the company’s investment in Grofers was to get more exposure to the space and build strategy around the e-grocery business. Zomato is reportedly planning a larger investment round in Grofers, amounting to over $400 million.

Total losses for Grofers increased by over 40% year-on-year to Rs 637.49 crore in the year to March 31, 2020. Revenue from operations, however, grew by a little over 135% y-o-y to Rs 165.27 crore in FY20.

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