Chief Executive Officer (CEO) of the online food delivery bellwether Zomato Deepinder Goyal has said that the company is focusing more on conserving cash than securing minority investments, as per the company's earnings release and letter to the shareholders. Goyal said, “For now, we are being aggressive about conserving cash.”
As per the letter, Zomato's Chief Financial Officer (CFO) Akshant Goyal also said during the course of this call that the company has around $1.6 billion unrestricted cash at this point and the capital needs are limited. Zomato CFO added that losses in the company’s core food business are reducing rapidly and all the minority equity investments are done.
He further noted, “As far as quick commerce is concerned, we had given an upper bound of $400 million investment in the next two years (CY22 and CY23) in the last quarterly letter. As of now, we are on plan to stick to this outer limit.”
Goyal explained, “Just to be clear, we are not planning to make any new minority investments as part of this $400 million outer limit. Think of this as the max amount of losses we may need to fund in this period of time in the quick commerce business, if and when we fully get into it.”
He also highlighted the investments made by Zomato in FY22 – Shiprocket and Grofers (now known as Blinkit). Deepinder Goyal invested $100,000 in Shiprocket which he exited at zero profit and/or loss. He also invested around $94,000 in 2015 in Blinkit and exited the investment in January this year.
Besides this, questions were also asked on media reports of a potential M&A between Zomato and Blinkit. To this, Goyal replied that the company continues to remain bullish on quick commerce sector and that Blinkit has grown well in the past six months.
He said, “We continue to remain bullish on quick commerce, especially given how synergic it is to our core food delivery business, and are excited with the progress that Blinkit has made in this space. While there is a lot to do as the business at its early stages, there’s still a lot of low hanging fruit to drive growth and efficiency. ”
Goyal added, “Blinkit has grown well in the past six months, and has also significantly reduced its operating losses. We have committed to give them a short-term loan of up to $150 million to fund their short-term capital needs. Beyond that, there is nothing to share at this moment.”
Meanwhile, Zomato reported a rise in its consolidated net loss to Rs 360 crore in the fourth quarter ending March 31, 2022. The company reported a net loss of Rs 134 crore in the year-ago period. Its consolidated revenue from operations went up 75 per cent to Rs 1,212 crore versus Rs 692 crore in the year-ago period.
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