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Zomato to soon launch grocery section on its app; confirms investment in Grofers

Zomato IPO is set to open for subscription on July 14 and close on July 16.

July 08, 2021 / 01:49 PM IST
Zomato | Representative image: mrinalpal via Shutterstock

Zomato | Representative image: mrinalpal via Shutterstock

Zomato will soon be launching a grocery section on its app, the company said on July 8, confirming its $100 million investment in SoftBank-backed online grocery firm Grofers while announcing its initial public offering.

This is the first time Zomato has spoken about its investment in the grocery firm. Moneycontrol was the first to report about the Zomato-Grofers deal closure on June 29.

Zomato has fixed the price band for its IPO at Rs 72-76 per equity share. The Rs 9,375-crore offer will open for subscription on July 14 and close on July 16. Anchor book, if any, will open for a day on July 13, a day before the issue opening.

Also Read: Zomato IPO to open next week: 10 key things to know about the issue and the company

The public offer comprises fresh issuance of Rs 9,000 crore, and an offer for sale of Rs 375 crore by existing selling shareholder Info Edge.

The deal with Grofers got sealed immediately before Zomato's IPO comes at a time when more consumers have moved to the online mode of buying groceries, owing to the COVID-19 pandemic.

However, this is not Zomato's first attempt to dabble in the grocery business. Last year, when the food ordering was impacted due to the pandemic, Zomato had tried to experiment with groceries. However, it was quick to exit the high burn segment as its core business recovered.

With an investment in Grofers, it will be Zomato's second attempt to deliver staples and fresh fruits and vegetables to its customers besides restaurant food.

Earlier this week, NRAI moved the Competition Commission of India (CCI) against Zomato claiming that their practices have an "appreciable adverse effect on competition".

Issues such as bundling of services, data masking, deep discounting, lack of transparency and exorbitant commission are highlighted in the submission.

Responding to a Moneycontrol's query during a virtual presser on how the company plans to handle the tussle with the National Restaurants Association of India (NRAI) the company said it was looking forward to working with them and resolving issues.

Zomato also announced that it had no plans to enter into private label products at a time when the government is trying to tighten the rope for marketplaces running such segments on their platforms.

While Zomato has no private-label brands in the pure food segment, it recently entered the nutraceutical business with the launch of private label health supplements.

Rival Swiggy runs private label brands such as The Bowl Company and Homely, among others.
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Priyanka Sahay
first published: Jul 8, 2021 01:48 pm