Gurgaon based Zomato losses has reported a significant increase in its operating losses in the financial year through March 2016 and even pushed parent Info Edge (India) Ltd into losses.
Pre-tax loss at Zomato widened almost four-fold to Rs 492.27 crore in 2015-16 from Rs 136 crore the year before. Revenue doubled to Rs 184.96 crore from Rs 96.73 crore, according to Mumbai-listed Info Edge’s regulatory filings.
Info Edge, which holds a 50.1% stake in Zomato, said the company posted a consolidated net loss of Rs 251.79 crore for 2015-16 compared with a net profit of Rs 24.1 crore the year before. Consolidated net sales rose 28% to Rs 938.2 crore from Rs 732.5 crore.
Info Edge operates a slew of internet properties including recruitment site Naukri.com, real estate portal 99acres.com and matrimonial website Jeevansathi.com. It also runs education services portal Shiksha.com.
This month, HSBC’s brokerage arm HSBC Securities and Capital Markets has slashed the valuation of Zomato by half to $500 million. This information was made available in a note covering Zomato’s majority investor Info Edge circulated last month. The note has raised concerns around Zomato’s ad-heavy business model, its international operations and growing competition in the online food ordering segment.
Zomato was valued at $1 billion when it picked up $50 million funding from Info Edge, Sequoia Capital and Vy Capital in April last year. Overall, it has raised about $225 million since its launch in 2008.
Early this year, Zomato which launched its online food ordering business in April 2015, had announced it will be shutting down its online ordering service in Lucknow, Kochi, Indore, and Coimbatore on account of a still nascent market in these cities.
The company was also in news for firing some 300 employees – 10% of its team in October .Earlier that month, it also shut down its cashless business citing cost reasons.
The food-tech sector became a red-hot investment destination for both angel and venture capital investors last year but the startups have been going through a rough phase as they try to find sustainable business models. Various funded companies have either permanently shut operations or scaled back their businesses.
This week, Mumbai-based food ordering app TinyOwl had temporarily withdrawn its services in all cities except Mumbai.
Mobile app Zeppery, which allowed users to pre-order food at restaurants and other food outlets and avoid long queues, decided to shut shop earlier this month, barely six months after commencing operations.
In February, Gurgaon-based Fingertip Foods Pvt Ltd, which operated online meal service startup Frsh.com, had closed its operations in Noida and Delhi, laying off 20 employees in the process.
Last year, Bangalore-based Eatlo Tech Solutions Pvt Ltd, which runs food delivery startup Eatlo, hadclosed its operations just five months after it raised angel funding from Powai Lake Ventures.