Zomato halves cash burn to $20 million in October
Sanjeev Bikhchandani, executive vice-chairman of Info Edge, said he was confident that Deepinder Goyal-led Zomato would not only defend its turf, in the face of an anticipated entry by Amazon into the space, but also grow in the face of increased ...
“In March, the burn was $45 million, and now (in October), it is $20 million. They have a clear agenda to keep cutting burn, while still growing orders,” Sanjeev Bikhchandani, executive vice-chairman of Info Edge, said during the quarterly earnings call with analysts.
Info Edge is a key strategic investor in Zomato, holding a shade over 26% in the company, which was valued at $3.6 billion by HSBC Global Research in March earlier this year.
“When you grow very fast and focus on top-line growth, very often you don’t keep an eye on cost of growth… So, a number of cost inefficiencies creep in. Now, they are solving that,” Bikhchandani said. “They are cutting misuse and abuse, like people breaking an order into 2-3 to get more discounts, and just by doing that they are able to cut burn,” he added. Bikhchandani also said he was also confident that Deepinder Goyal-led Zomato would not only defend its turf, in the face of an anticipated entry by Amazon into the space, but also grow in the face of increased competition.
“Food delivery is very different from ecommerce, because consumers want food delivered in less than 30 minutes and while obviously we are watching with interest, we believe Zomato will continue to grow and defend its turf,” Bikhchandani said.
Info Edge executives also confirmed Chinese internet giant Tencent’s investment in another portfolio company, online insurance aggregator PolicyBazaar and said it did not anticipate any threats from SoftBank- and Alibaba Group-backed Paytm, which is also expected to grow its insurance business. While currently there are no plans of undertaking secondary transactions in PolicyBazaar and Zomato, company executives said, should the latter, which is engaged in a stiff battle with rival Swiggy for market primacy, require further cash infusions, it will get the same, given the ongoing substantial interest by investors.
The comments come even as Info Edge posted stronger second quarter results, boosted by improved billings. For the quarter ended September 30, 2019, the company posted total income at Rs 339.8 crore, up 16%, compared to the year ago quarter.