Online grocery delivery company Grofers has applied for clearing a Foreign Direct Investment opportunity, reports The Hindu. Filings with Department of Industrial Policy and Promotion (DIPP) shows that Grofers India Pvt Ltd has sought approval “to undertake trading including through e-commerce in food products manufactured and/or produced in India”.
The application from Grofers comes after the government allowed 100% FDI in single brand retailing for the ecommerce sector in June, giving a boost to sub industry sectors including online grocery startups. However this was applicable only in food retail. Most startups in the grocery delivery segment also sell other household items such as soap, shampoos, cleaning agents etc.
Grofers will most likely have to separate its food business from the rest of its operations to attract investment. More here.
Grofers layoffs and service shutdown
In June Grofers had reportedly fired 10% of its work-force while retracting 67 job offers given to fresh graduates. The company cited “general slowdown in activity” within the grocery delivery business as one of the reason behind the lay-offs, in an email circulated among the employees.
In January, the company had shut down services in 9 cities including Ludhiana, Bhopal, Kochi, Coimbatore and Visakhapatnam in September 2015. Grofers now operates in 17 cities.
Funding: In November, Grofers raised $120 million in a round of funding from SoftBank, Russian entrepreneur Yuri Milner, with participation from existing investors Tiger Global and Sequoia Capital. Note that the company raised funding worth $35 million from Tiger Global Management and Sequoia Capital India in April, less than two months after it had raised series A funding of $10 million.
Acquisitions: In September, Grofers acquired the B2B logistics service provider Townrush for an undisclosed amount. The acquisition was essentially an acqui-hire with Townrush ceasing to exist as an independent company. Around the same time, Grofers also acqui-hired SpoonJoy for an undisclosed amount. In April, it acquired mobile grocery My Green Box.
Other developments in FDI
Relaxed local sourcing norms: The government has relaxed FDI rule of mandatory 30% local sourcing for opening single brand retail stores for up to three years, and additionally up to five years if the brand proved that its products are “state-of-art and cutting edge’ technology. This comes as boost to companies like Apple, LeEco and Xiaomi, which had earlier applied for exemption of local sourcing rules.
FDI in Telecom: Foreign telecom conglomerates and companies have been increasing their stakes in its Indian counterpart, after India allowed (FDI) in telecom in 2013. Some of the most recent ones include:
-Last month, Singtel signed an agreement to acquire 7.39% stake in Bharti Telecom Limited—the holding company of Bharti Airtel in India.
-In June, Russian conglomerate Sistema JSFC signed an agreement with the Russian Federation for State Property Management to buy back 17.14% stake owned by the federation in Sistema Shyam TeleServices (SSTL), an Indian subsidiary of Sistema JSFC.
– In October 2014, Telenor Group acquired 100% of the shares in its India unit Telewings held by Lakshdeep Investment & Finance.