Zomato expands its eco-system with another investment

Zomato has invested a total of INR 38 crores in a food robotics company– “Mukunda Foods Private Limited”. Through its BSE filing, the company informed the exchange about its proposed investments in these companies. The company has also proposed to grant loans up to INR 1140 crores to Grofers India Private Limited ("GIPL") in one or more tranches.

Mukunda Foods Private Limited:

The board of Zomato has approved an investment of INR 38 crores in Mukunda Foods, a food robotics company, for a stake of 16.66 %. The proposed investment is strategic in nature as the company designs and manufactures smart robotic equipment to automate food preparation for restaurants. Their products enable restaurants to scale rapidly while maintaining consistency in food quality and customer experience across multiple outlets. Mukunda also helps restaurants to become more efficient by reducing manpower cost, wastage and increasing kitchen throughput. The company has earned a revenue of 103 crores in 2020 but due to disruption in the restaurant industry, the revenue came down to 32 crores in FY 2021. If the pre-covid revenue is considered, the transaction has been conducted at a Price/Sales value of 2 which is pretty good.

Grofers India Pvt ltd (BLINKIT):

Zomato has also decided to lend a sum of approx. 1140 crores to BLINKIT, a quick commerce company that operates around 440+ dark stores across major cities in India. The interest rate for the loan will be 12% p.a. or higher with a tenor of not more than 1 year. This loan will support the capital requirements of GIPL in the near term and is in line with our stated intent of investing up to INR 3000 crores cash in quick commerce in India over the next 2 years.

Merger:

Zomato and instant delivery service Blinkit, formerly Grofers, have signed a term sheet as a precursor to the merger, reported by ET Now. Zomato had acquired a stake of 10% in BLINKIT before its own IPO at a valuation of 7,500 crores post which Zomato had committed an additional boost of 3000 crores in the quick commerce space in a filing of Q2 FY 22 results. The merger is said to take place at a valuation of 5300 crores which is significantly below the previous valuations.

Softbank which is one of the major investors in BLINKIT is supposed to get a 4-5% stake in Zomato post-merger in a share-swap deal. The interesting thing to note here is that Softbank is the lead investor in Zomato’s rival -Swiggy. The development happens at a time when Blinkit has laid off employees, shuttered dark stores, and delayed some vendor payments, amid intense competition in the quick commerce space.

Originally Published On: https://blog.investyadnya.in/zomato-expands-its-eco-system-with-another-investment/