Zomato | Representative image: mrinalpal via Shutterstock
Food delivery platform Zomato filed its Draft Red Herring Prospectus (DRHP) with the market regulator on April 28, kicking off one of India's most-anticipated internet initial public offerings (IPOs) in a tumultuous year.
According to the DRHP filed by Zomato, the company will offer equity shares aggregating up to Rs 8,250 crore (nearly $1.1 Billion). Of this, Rs 7,500 crore will be a fresh issue, while Rs 750 crore will be an offer for sale for its existing investor Info Edge.
In its DRHP, Zomato stated a number of risk factors that may cause actual results to differ materially from those hoped for by the company.
According to Zomato, some of these key risk factors are:
> Zomato may not be able to sustain historical growth rates, and historical performance may not be indicative of future growth or financial results.
> The company said it has a history of net losses and that it anticipates increased expenses in the future.
> The COVID-19 pandemic, or a similar public health threat, has had and could impact our business, cash flows, financial condition and results of operations, the company said.
> Zomato said its revenue may decrease and the business may be adversely affected if it fails to retain existing restaurant partners, customers or delivery partners or fails to add new restaurant partners, delivery partners or customers to its portfolio in a cost-effective manner.
> The company said its business, cash flows and prospects may be materially and adversely affected if it is unable to continue to provide services to its restaurant partners or to implement its strategy of enabling more restaurants with more solutions.
> The company reiterated that the growth of its business will depend on the strength of its brand, and any failure to maintain, protect and enhance it may limit their ability to retain or expand the customer base. This, in turn, may materially and adversely affect its business, cash flows, financial condition and results of operations, Zomato said.
> The food delivery platform said that unfavourable media coverage could harm its business, financial condition, cash flows and results of operations. It also noted that it faces “intense competition” in food delivery and other businesses and its business, financial condition, cash flows and results of operations could be adversely affected if the company is unable to compete effectively.
> The company, founded by Pankaj Chaddah and Deepinder Goyal, said it could suffer if it did not continue to innovate and further develop its platform or if such developments do not perform, or are unable to keep pace with technological developments.
> Failure to generate and maintain sufficient high quality customer generated content could negatively impact the business, the company noted.