Online food ordering and delivery platform Zomato nearly doubled its revenue to Rs 3.09 billion in the year that ended March 31, 2017, while cost cutting during the year ensured that expenses went up only marginally to Rs 3.69 billion from Rs 3.31 billion in the previous year.
Zomato, which was seen to be struggling until recently when Alibaba’s affiliate Ant Financial invested $200 million into it, however, registered a loss of Rs 5.85 billion during FY17. While the company was able to curb spending, the drop in value of its overseas subsidiaries due to scaling down of operations accounted for exceptional expenses of Rs 5.25 billion.
Overall, this meant that the company’s net loss for the year that ended March 31, 2017 rose by 108 per cent, according to documents the company filed with the Registrar of Companies which was sourced by this newspaper from business platform Tofler.
“There has been a small increase in the total expenses to INR 3.69 billion from INR 3.31 billion in the previous year, in comparison to increase in total revenue. This has been possible due to the increased operational efficiencies in the business operations and cost optimization measures taken by the Company during the financial year under review,” the document read.
Even in FY18, Zomato is expected to show good control over its expenditure as it fought to conserve cash, bringing the company closer to breaking even operationally. However, a resurgence of interest in India’s food ordering space has led to investors pumping in cash into the three largest players in the space, which could cause yet another price war.
The signs of this upcoming war can already be seen, as Swiggy, Zomato and Foodpanda have all begun subsidising deliveries for low-cost orders which previously customers were paying for. The mandate from the investors has once again moved away from building towards profitability to grabbing market share and getting as many new users to use their platforms, say experts.
While Zomato has recently raised $200 million, out of which $150 million was directly in the company, it hasn’t yet outlined if it will once again focus on growing its service outside of India. After making a big splash in 2016 by entering nearly 30 countries even through a number of acquisitions, the company has continuously scaled down its overseas business.
This had even lead to a markdown of the company’s valuation by a couple of investors, but its most recent investment from Ant Financials saw the company retaining the unicorn tag as the money was pumped in at an alleged valuation of around $1.1 billion. So far, Zomato has raised around $443 million and recent reports have suggested that the company could be in the market for more capital.