Zomato to re-enter online grocery delivery business on $100 million investment in Grofers

Zomato, an online food delivery platform, will soon launch an online grocery facility on its app.

zomato Q1 earnings
Zomato made a stellar debut on bourses on July 23

Zomato, an online food delivery platform, will soon launch an online grocery facility on its app. The company, today, said that it will re-enter the online grocery delivery business going ahead. The company confirmed its $100 million investment in online grocery firm Grofers during the IPO announcement. Last year, Zomato launched its online grocery business, but closed soon after. It may be noted that Swiggy, Zomato’s competitor, already has its presence in this business. Zomato’s announcement comes after Tata Digital bought a majority stake in BigBasket. Moreover, under HyperPure, an initiative by Zomato, the company provides fresh and high-quality supplies such as vegetables, fruits, groceries, spices, etc., to restaurants.

Earlier this year, Zomato forayed into the health and dietary supplements market. Founder and CEO Deepinder Goyal in a tweet hinted at the launch of functional foods soon, saying “Functional foods… coming soon to your favourite food app.” These dietary foods are known as nutraceuticals.

The food industry in India is highly under-penetrated, with only 8-9 per cent of food consumption from restaurants. Zomato claims to serve the online food delivery market with combined offerings of platforms such as Yelp, DoorDash and OpenTable on a single platform. The company staged a smart recovery from the negative impact of COVID-19 pandemic and posted the highest ever GOV (gross order value) in a quarter at $451 million.

Zomato on Thursday informed that its Rs 9,375-crore IPO will open for subscription next week. Investors can bid in the lot of 195 equity shares and in multiples thereof. At the upper price band investors will require to spend Rs 14,820 to buy a single lot of Zomato. The anchor portion is likely to open one day before the opening of initial public offering, on Tuesday, July 13, 2021.

According to the red herring prospectus (RHP), the share allotment will take place on July 22, 2021, and the shares of Zomato are expected to be listed on BSE and NSE on July 27, 2021. The company informed that it will use the money raised through IPO towards organic and inorganic growth initiatives funding and will use up to 25 per cent for general corporate purposes.

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