During InfoEdge’s earnings call on June 23, which owns a 22.71% stake in Zomato, InfoEdge founder and vice chairperson Sanjeev Bhikchandani had said that the funding from Ant Financial was yet to come but they had investor interest from other investors who don’t need any permission to invest in an Indian company. But the Financial Times reported on Sunday (July 5) that Zomato’s $100 million funding from Ant Financial, a sister company of Tencent and Alibaba, has been scuppered by the recent Indo-China tensions.

“There has been substantive, there was immediate substantial hit because restaurants are closed, delivery boys don’t travel out, some delivery boys have gone home to their hometowns,” Bhikchandani said during the earnings call, but as restrictions are easing up and restaurants are re-opening, “there has been a bit of bounce back”. It is still well below the levels last year or in February this year but “burn is substantially down” and people are “moving to a better unit economics model” with fewer discounts. He said that Zomato is making “positive money” after meeting all variable costs each quarter. He didn’t share exact numbers but said that the company will improve in the coming months. Bhikchandani also said that it has enough interest from both internal and external investors.

“Globally delivery has really picked up post-COVID. In India there were logistical issues where Delhi boys were on our travels restaurants are still, many of them are still shut [sic]. But once those are over, delivery is expected to be a big big big business. Now that’s what people are saying but we don’t know right until it happens and India could be different logistically. Now having said that this is the understanding some investors have.” — Sanjeev Bhikchandani

Bhikchandani also clarified that Zomato is primarily a food delivery company that delivers food from restaurants and cloud kitchens. It “did groceries for a while” but stopped “after the crisis was over”. He said “liquor [delivery] hasn’t really been done yet” since it is a tricky business that is highly regulated and requires government clearances.

Costs passed on to customers: Bhikchandani also said that whenever delivery service has faced shortage, delivery personnel were given financial incentives and Zomato “passed those extra cost[s] on to customers” thereby improving their margins.

Watching competition from Amazon, and how food delivery logistics differ from other delivery logistics: Bhikchandani said that it’s too early to say anything about Amazon’s food delivery business since “it just runs a small operation in Bangalore”, but Zomato is watching it. He said that the logistics of delivering food are very different from delivering other goods as Amazon or Flipkart do. “Food is delivered in 45 minutes and that’s it. … It means it’s very local,” he said. This makes the network very intense with two peaks in the day — lunch and dinner. For the rest of the day, there is not much demand. In e-commerce or with other products, orders can be clubbed, routes can be changed, deliveries can be spread across days, a delivery person can carry multiple packets, that’s not possible in food delivery, he explained. While Amazon is a cash-rich company which is good at execution and is a good logistics company, “restaurants need a special focus”, he said.

  • Zomato had 8X delivery personnel Amazon had in 2019: Bhikchandani said that Zomato founder and CEO Deepinder Goyal had told him in 2019 that Zomato had eight times the delivery personnel than “e-commerce people like Amazon” because Zomato has only 45 minutes to deliver twice a day.

Competing platform from National Restaurants Association of India (NRAI): “I am a little skeptical,” Bhikchandani said about NRAI’s plan to bring about its own platform since NRAI allies with Zomato and Zomato depends on it.

  • PolicyBazaar: Affected by moratorium extensions, exploring expansion into non-lending categories, and “reduced their headcount substantially” to meet profitability targets for the year
  • Shopkirana and Gramophone: Temporarily dislocated but “has since bounced back”

InfoEdge’s Alternate Investment Fund, acquisition of iimjobs.com

Through its Alternate Investment Fund Class II Fund, registered with the SEBI, InfoEdge started funding investments unrelated to its core operating entity from January 2020. It had proposed a corpus of ₹750 crore of which it committed ₹350 crore, and has disbursed ₹150 crore thus far. There is also an asset management company (AMC), a trust and a fund, Bhikchandani said. They are looking to get an external investor for the fund, he said.

The AIF has a separate management team that also runs InfoEdge’s investment strategy, Bhikchandi said.

Investments include ₹10.4 crore in billing company Dotope, ₹25 crore in content platform Qyuki Digital Media, ₹3.7 crore in Intellihealth Solutions that focusses on weight loss using software, and ₹3.5 crore in Fanbuff Esports which operates e-sports community engagement platform Fanclash.

It also bought 100% stake in iimjobs.com in an all cash deal and its revenue was ₹21.8 crore in FY20, Oberoi revealed. The sales teams of Naukri and iimjobs.com have been fully integrated.

*

Press Release | Financial Result | Financial Statement | Presentation | Earnings Call Transcript