FHRAI seeks infrastructure status, simplified approvals, and GST reduction in pre-budget proposals for India’s hospitality sector

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January 31, 2024

On Wednesday, the Federation of Hotel & Restaurant Associations of India (FHRAI) outlined a series of pre-budget expectations with the goal of reshaping the hospitality sector in India.

The hotels’ industry association proposed granting universal infrastructure status to hotels with a project cost exceeding INR 10 crores, regardless of the city’s population. This initiative seeks to eradicate geographical biases and enhance growth and accessibility within the hotel industry.

“The inclusive approach aligns with the spirit of equitable development, promising a remarkable nationwide surge in the hospitality sector,” it said in its report.

The apex association for the hospitality sector emphasized that conferring infrastructure status would have a transformative impact, enabling the sector to access long-term loans at cost-effective interest rates, thereby expediting its overall growth. Additionally, the sector anticipates further stimulus packages and incentives from the government to better equip it in attaining the ambitious goal of hosting 100 million international tourists by 2047. This includes advocating for a favorable GST regime and implementing measures to simplify business operations within the hospitality industry.

Continue Exploring: FMCG companies anticipate inflation-focused measures in upcoming budget to boost consumption and rural growth

“The hospitality industry is a vital contributor to India’s economic growth. We believe that the proposed pre-budget reforms are pivotal in catering to the untapped potential of our diverse nation, propelling the hospitality sector towards unprecedented growth. FHRAI urges the government to consider these reforms seriously, recognizing the crucial role of tourism and hospitality in shaping India’s economic landscape,” said Pradeep Shetty, President of the Federation of Hotel & Restaurant Associations of India.

As per the FHRAI pre-budget expectations report, the absence of a uniform system in the hospitality sector for approvals and compliance has been a concerning issue, hampering the growth of the tourism and hospitality sector in the country. From the inception of a hospitality project to the day-to-day running of the establishments, the sector is tangled in the complex web of bureaucratic processes.

“This needs to be simplified through measures such as a single window clearance system deemed approvals, self-regulation, merging of multiple approvals & licences and fixing a validity period of a minimum of 5 years for the license,” it said.

The federation emphasized the imperative to categorize tourism, travel, and hospitality under the concurrent list, aiming to establish a unified national framework shared between the Centre and States for all aspects of tourism and its related sectors.

The federation identified tourism as a crucial sector in the country, contributing approximately 10 percent to the GDP. Recognizing the substantial potential of the tourism and hospitality industry to serve as a primary catalyst for socio-economic development, it advocates for the declaration of tourism as a priority sector in the country. This designation would involve providing special incentives and benefits to empower the sector in realizing its full potential.

FHRAI has urged for a thorough examination and reduction of GST rates within the hospitality sector, with the aim of positioning India competitively on the global stage. In particular, the proposal advocates for the elimination of the 18 percent GST category applicable to hotels exceeding INR 7500, suggesting its merger with the more moderate 12 percent GST category.

Finance Minister Nirmala Sitharaman is all set to deliver the interim budget on February 1, ahead of the Lok Sabha polls scheduled in 2024.

Continue Exploring: Apparel exporters lobby for tax incentives and GST uniformity in budget 2024 to stimulate domestic manufacturing

After four years of R&D, Kikkoman launches exclusive dark soy sauce tailored for the Indian market

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January 31, 2024

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For the first time in its 350-year history, Kikkoman is launching a dark soy sauce crafted exclusively for the Indian market.

Demonstrating a dedication to Indian consumers, Japan’s Kikkoman has invested four years in creating a natural dark soy sauce. This variant, distinct from its globally renowned classic naturally brewed Kikkoman Soy Sauce, was crafted in response to the realization that many Indians expect Chinese and Pan-Asian dishes to have a visually appealing rich, dark color.

Kikkoman’s renowned classic soy sauce is celebrated for its natural brewing process involving only four essential ingredients: soybeans, wheat, salt, and water. This unique combination imparts the sauce with its distinctive clear reddish-brown hue. When creating a dark soy sauce specifically for the Indian market, Kikkoman aimed to deliver a similarly natural product, steering clear of the chemicals and artificial seasonings commonly employed by other dark soy sauce producers for color enhancement.

The outcome is the creation of Kikkoman Dark Soy Sauce, formulated by incorporating the traditional soy sauce as the foundation, along with Kikkoman’s proprietary technology designed to produce a rich, deep color.

“We set out to create a dark soy sauce that goes beyond superficial colour enhancements,” said Shohei Yokobari, Product Manager for Kikkoman Dark Soy Sauce. “It was a huge challenge to develop a natural product without added colouring or flavouring agents which is why it took four years of relentless effort and innovation. We are proud to present Kikkoman Dark Soy Sauce – a culmination of our rich brewing history and cutting-edge proprietary technology.”

Earlier, Indian chefs faced a challenge when aiming for a dark color in their dishes. While they could employ dark soy sauce for the color, it came at the expense of the delectable taste and umami characteristic of the classic Kikkoman Soy Sauce. Often, chefs resorted to combining the two, but this remained unsatisfactory as the dark soy sauces accessible to them often contained undesirable chemicals. Their aspiration was to present dishes to diners using natural and authentic ingredients. With Kikkoman Dark Soy Sauce, chefs have now found an ideal solution.

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“The flavour profile is complex and deep and if I do a blind tasting, I can easily distinguish a dish made with Kikkoman Dark Soy Sauce and one made with other soy sauces,” said Chef Vikas Seth, culinary director at Embassy Leisure, Bengaluru.

Chef Huang Te Sing, executive corporate Chinese chef at The Oriental Blossom, Marine Plaza Mumbai, called the new sauce ‘fantastic’. “It has a distinguishable umami element and the right colour balance which goes very well in my Chinese dishes at Oriental Blossom.”

At the Berco’s chain in Delhi-NCR which has 46 outlets, Chef Vishal Kharel, culinary director, plans to start using Kikkoman Dark Soy Sauce across the board because of what he called its ‘awesome taste’. “It is more flavourful in taste and natural in colour which is a perfect combination,” said Kharel.

Crafted in India, this product utilizes Kikkoman Honjozo Soy Sauce from Japan as its primary ingredient, aligning with the ‘Make In India‘ initiative. For chefs who prioritize locally sourced ingredients, this aspect adds another layer of appeal to the new sauce.

Continue Exploring: Epigamia launches India’s first 25g protein milkshakes with zero sugar

Gems and jewellery industry urges rollback of increased gold customs duty in interim budget, calls for streamlined tax structure

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January 31, 2024

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The gems and jewellery industry is pressing for the rollback of the increased basic customs duty (BCD) on imported gold in the upcoming interim Budget, while also urging the government to introduce a more streamlined tax structure.

“The jewellery industry contributes nearly 7 per cent of India’s GDP and hence, deserves a pro-business environment,” stated Saiyam Mehra, Chairman of the All India Gem and Jewellery Domestic Council, the apex body for the gems and jewellery industry.

“This will also benefit the government. We urge the finance ministry to withdraw the increase in BCD on gold in the upcoming Union Budget and a rationalised tax structure may be developed to tackle the CAD issue,” Mehra said.

He further mentioned that at present, the Basic Customs Duty (BCD) stands at 12.5 percent ad valorem, bringing the total tax on imported gold to 18.45 percent.

Continue Exploring: FMCG companies anticipate inflation-focused measures in upcoming budget to boost consumption and rural growth

He additionally appealed to the government to raise the transaction limit for PAN cards to INR 5 lakh, up from the existing INR 2 lakh, citing the surge in gold prices.

“With the rising gold rate, there is an urgent need to increase the PAN card transaction limit to INR 5 lakh from the present INR 2 lakh. A majority of consumers in rural India buy gold as an investment.

“Consumers also sell gold in case of an emergency. With the cash purchase limit of INR 10,000 per day under the Income Tax Act, consumers cannot sell gold jewellery to meet their needs. Hence, the daily purchase limit also needs to be increased to INR 1,00,000 per day,” he added.

Continue Exploring: Apparel exporters lobby for tax incentives and GST uniformity in budget 2024 to stimulate domestic manufacturing

Moreover, the GJC has proposed the reinstatement of the EMI facility for the gems and jewellery sector.

India Bullion and Jewellers’ Association (IBJA) Director and PNG Jewellers Chairman and Managing Director Saurabh Gadgil said, “The gems and jewellery industry awaits measures to fortify the IIBX exchange, enhanced liquidity for it, so that India becomes a price maker and not a price taker.”

“Reduction in import duties on gold will ensure that unscrupulous grey market players lose their edge and start getting more organised,” he added.

Consumer goods giants navigate fluctuating commodity prices, impacting product pricing and demand recovery strategies

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January 31, 2024

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Major consumer goods firms such as Hindustan Unilever (HUL), ITC, Maruti Suzuki, and Parle Products have reported fluctuations in certain commodity prices. According to industry executives, these fluctuations are influencing the companies’ decisions on product pricing and affecting the recovery process of demand in specific categories.

In a investor presentation on Monday, ITC highlighted that although there is commodity price deflation on a year-on-year basis in the October-December quarter, there is a sequential increase in prices for specific commodities like wheat, maida, and sugar.

HUL, the largest consumer goods manufacturer in the country, stated that sectors such as health food drinks and coffee are experiencing rising inflation, affecting volume recovery. Additionally, in the tea category, consumers are downgrading due to the price disparity between premium and regular tea. The company has labeled this phenomenon as an ‘inflation-deflation cycle.’

Earlier this month, Ritesh Tiwari, the Chief Financial Officer of HUL, informed analysts that the foods and refreshment business maintained positive pricing, driven by inflation in commodities such as coffee and sugar.

Producers of automobiles and household appliances, including refrigerators, air conditioners, and washing machines, have reported a 3-4% sequential rise in commodity costs like steel, aluminum, and polypropylene over the past 2-3 months. While this situation justifies a potential price increase, appliance manufacturers are absorbing the additional costs, whereas car makers are passing on a portion to support the recovery of demand.

Continue Exploring: Major consumer goods companies overhaul distribution strategies to revitalize rural markets and boost sales amidst sluggish demand

Maruti Suzuki implemented a slight 0.45% price increase, while Hyundai Motor raised prices by 0.5%. MG Motor India has not made any price adjustments thus far. Tata Motors has announced a conservative price hike of 0.7%, which will be effective from February 1. This marks one of the most restrained price hikes in the industry, as companies traditionally raise prices by 2-3% in January.

Mayank Shah, senior category head at Parle Products, noted that over the past 3-4 months, the prices of wheat have increased by 10-15%, and sugar has seen a rise of 20-25%. These hikes are attributed to shortages, offsetting the gains achieved from the significant 50% decline in edible oil prices.

“At an overall deflationary environment, certain commodities are acting volatile whose contribution is high in the total input cost. Due to this, we are not able to pass on the full benefit of dip in edible oil prices. Input cost deflation is not happening the way it was expected initially,” he said.

Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki, stated that the price increase in January is among the most minimal the company has implemented in recent times.

“We did not want to raise prices and put pressure on the small car segment. While steel prices are still high, costs of some other commodities have softened balancing out that impact. We have also undertaken production efficiency measures to control costs and not burden our customers,” said Srivastava.

Material expenses make up 75-77% of the total vehicle costs across various car manufacturers.

Certainly, the majority of commodity prices have stabilized, leading to a decrease in the overall material costs for FMCG companies in recent months. In an effort to enhance volume recovery, FMCG companies have either lowered prices or increased product weight where feasible. Consequently, HUL witnessed a negative price growth of 2% in the December quarter, resulting in a flat underlying sales growth.

Marico’s digital-first brands on track to achieve ‘meaningful profitability’ by 2027, CEO Saugata Gupta sets ambitious goal

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January 31, 2024

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Saugata Gupta, Marico's Managing Director and Chief Executive Officer

Marico Ltd. is set to achieve “meaningful profitability” in its portfolio of digital-first brands within the next three years, according to Saugata Gupta, the Managing Director and Chief Executive Officer.

The current portfolio includes acquired brands such as Beardo, True Elements, Just Herbs, and Plix, along with two organic brands—Pure Sense and Coco Soul—spanning both food and personal care categories.

In the third quarter of FY24, these brands achieved an annual run rate of INR 400 crore on exit basis. Marico’s objective is to generate 20% of its domestic business from the combined digital-first portfolio of food and premium personal care.

The company is actively pursuing increased profitability in these ventures through scale expansion. It anticipates that the overall Ebitda margin will not be significantly affected by the scale-up, given that the majority of products exhibit accretive gross margins.

Continue Exploring: Marico reports a 16% surge in net profit, reaching INR 386 Crore in Q3 FY24

“The biggest improvement in D2C business has been in terms of the burn rate… the entire diversified portfolio of both food and digital will become meaningfully profitable by 2027,” Gupta said.

The company aims to achieve a double-digit Ebitda margin for its digital-first brands within the next three years.

Beardo, the men’s grooming brand acquired by Marico in 2017, is already operationally profitable, according to Gupta. The premium personal care brand, Just Herbs, and the health food brand, True Elements, are expected to achieve Ebitda break-even next year. Additionally, Gupta anticipates that the plant-based nutrition brand, Plix, will generate INR 200 crore in revenue in FY25, with margins higher than the overall foods category.

For FY24, Marico is revising its expectations for the foods business, now anticipating a revenue of INR 750 crore compared to the previous guidance of INR 850 crore. The company aims for an organic top-line growth rate exceeding 20% for the overall foods segment in the coming year.

The packaged consumer goods manufacturer recorded a decrease in revenue growth and a volume growth of only 2% in the October-December quarter.

The company anticipates achieving positive top-line growth in Q4 as price cuts in its core brands, Parachute and Saffola, stabilize. This growth is poised to gain additional momentum, reaching double digits in FY25, supported by sustained price adjustments, revenue expansion, and modest inflation in copra. However, the gradual pace of volume growth is expected due to the slower-than-anticipated recovery in rural demand.

Gupta anticipates that volume growth will fall within the mid-single digits during the first quarter of FY25.

Marico has also guided for a gross margin expansion of 450-500 basis points at the FY23 level. This increase is expected to be supported by favorable input cost trends, a strategic emphasis on premiumization, and enhanced margins in the food and digital business. However, the growth in operating margins is projected to be constrained, reaching a maximum of 250 basis points, capped at 21%, owing to elevated advertising expenditures.

Continue Exploring: Marico’s innovative flavor strategy propels Saffola to top spot in oats market

CURRYiT disrupts market norms with the launch of India’s first 100% natural, preservative-free Ginger Garlic Paste

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January 31, 2024

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CURRYiT, a highly cherished food startup, is delighted to introduce India’s first Ginger Garlic Paste without any preservatives or additives. This innovative product disrupts the existing market landscape dominated by established brands relying heavily on additives and preservatives for everyday staples like Ginger Garlic paste.

Ginger and garlic are staples in most Indian cuisines, making ginger garlic paste a popular choice, especially in urban areas. Unfortunately, many packaged ginger garlic pastes contain preservatives and additives, resulting in a sour, industrial aroma that has discouraged mothers and home cooks from using these staples in their cooking.

At CURRYiT, the team undertook a comprehensive consumer survey to grasp the challenges and expectations associated with a staple product like this. Aligned with the brand’s commitment to producing clean and additive-free items, the solution was straightforward – introducing a preservative-free Ginger Garlic Paste for everyday culinary use. Through this product, CURRYiT challenges the widespread reliance on preservatives by major players, providing an alternative that prioritizes transparency and authenticity.

CURRYiT’s Ginger Garlic Paste is crafted using traditional homemade techniques, reminiscent of the age-old sil batta (mortar & pestle) method. This process aligns perfectly with the brand’s commitment to providing a fresh, pure, and flavorful experience that captures the essence of Indian culinary traditions.

Richa Sharma & Nischal Kandula, Co-Founders of CURRYiT said, “We believe in keeping it 100% Natural, ensuring 100% Great Taste. The preservative-free Ginger Garlic Paste by CURRYiT is a game-changer in the ready-to-cook category. Unlike other commercial pastes, we ensure a perfect balance of garlic and ginger without the foul smell and health impacts of preservatives or additives. It is truly a clean convenience.”

Richa Sharma & Nischal Kandula, Co-Founders, CURRYiT

Testimonials from users commend the product’s natural taste and aroma, describing it as an essential element for curries and a valuable time-saving addition to the kitchen by eliminating the need to peel garlic and ginger. In contrast to competitors laden with preservatives, acidity regulators, stabilizers, xanthan gum, and thickening agents, CURRYiT distinguishes itself with a preservative-free formula—no preservatives, no acidity regulators, no stabilizers, no xanthan gum, no thickening agents.

Available at an affordable price of only INR 99, CURRYiT’s Preservative-Free Ginger Garlic Paste becomes a readily accessible option for enthusiasts and home chefs in search of high-quality culinary ingredients without any compromise.

Continue Exploring: A-Listers Spice Up Their Portfolios with Bold Bets on India’s Booming F&B Startups

Aquaconnect secures $4 Million in Pre-Series B funding led by S2G Ventures to fuel growth and innovation in Indian aquaculture

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January 31, 2024

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Rajmanohar Somasundaram, Founder, Aquaconnect

Aquaconnect, a Chennai-based full-stack aquaculture startup, has raised $4 million (INR 33 crore) in a Pre-Series B funding round led by US-based S2G Ventures.

The recently secured funding will be utilized by the startup to enhance its operations and extend its presence nationwide. Additionally, the capital will be allocated to strengthen its technological infrastructure, broaden the product portfolio, explore new market segments, and double its network of partners within the next six months.

Aquaconnect Founder and chief executive officer (CEO) Rajmanohar Somasundaram, said, “The investment from S2G reinforces our mission of transforming the Indian aquaculture landscape through a phygital approach. The funds come at a critical juncture as we gear up for our next phase of growth to capture new opportunities, with an intense focus on expanding our operations in major markets.”

Commenting on the fundraise, managing director at S2G Ventures Kate Danaher added, “As a leading organisation in the second largest aquaculture market in the world, we believe Aquaconnect is ideally positioned to capture meaningful market share and contribute to a future of sustainable growth across the sector.”

Established in 2017 by Somasundaram, Aquaconnect is a full-stack aquaculture platform employing AI and remote sensing data to predict the demand for farm inputs and the supply of harvested produce.

Capitalizing on this data, the platform operates offline last-mile touchpoints that facilitate connections between aqua farmers and farm input brands. Additionally, it collaborates with Non-Banking Financial Companies (NBFCs) to provide formal credit services to its retail partners and seafood buyers, addressing their working capital requirements.

Aquaconnect asserts its presence in six states with a network of over 500 on-ground partners. The platform also states that it serves over 30 brands and has achieved a fourfold increase in revenues in the last fiscal year.

Continue Exploring: Govt launches INR 576 Crore aquaculture plan to transform northern states into sustainable shrimp farming hubs

This development comes more than a year after the startup last raised $15 million as part of a Series A funding round led by Lok Capital in December 2022. Prior to that, it also secured $8 million in venture debt from Trifecta Capital in early 2022.

The startup has garnered support from notable entities, including Louis Dreyfus Company Ventures, Suneight Investments, AgFunder, Omnivore, Rebright Partners, and various others.

It competes with companies like AquaExchange, Captain Fresh, Eruvaka, and others.

Interestingly, this development occurred mere days after AquaExchange successfully raised $6 million in its Series A funding round, led by the London-based private equity firm Ocean 14.

The aquaculture market in India remains predominantly unorganized, characterized by the presence of local players. However, with the increasing demand for seafood both in domestic and international markets, Indian aquaculture startups are turning to technology to enhance the efficiency of feed procurement and forecast market trends.

Continue Exploring: Seafood companies boost investments in local market amid global export challenges: Shrimps, squids, and lobsters see surge in domestic demand

According to a report, the aquaculture industry in India is expected to reach a market size of $29.37 billion by 2028.

Arvind faces fifth consecutive quarterly revenue decline amidst lackluster prices and diminished demand in casual and denim market

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January 30, 2024

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On Tuesday, Arvind Ltd, a leading player in the casual and denim market, announced a decline in revenue for the fifth consecutive quarter. This downturn was influenced by lackluster prices of woven products and decreased demand for denim.

The Bengaluru-based company, known for its portfolio of owned and licensed international brands like Tommy Hilfiger and Calvin Klein, disclosed a 4.6% decrease in consolidated revenue from operations to 18.8 billion rupees during the December quarter.

The textile segment, constituting approximately 75% of the company’s total sales, experienced an 8% decline in revenue.

The decline in cotton prices, a crucial raw material, led the retailer to lower product rates compared to the levels observed a year ago.

Continue Exploring: Arvind Fashions aims to be debt-free in 2 years with a franchise-based expansion strategy

Additionally, the company noted a seasonal decline in volumes, attributing it to subdued demand in the denim category.

Arvind retails denim products under brands like U.S. Polo Association, Arrow, and Flying Machine.

Retailers, grappling with subdued demand throughout the fiscal year as inflation-weary consumers cut back on spending, have faced challenges in maintaining steady financial performances. Arvind has seen its revenue fall between 11% and 21% in the last four quarters.

During the reported quarter, the company experienced a 6.4% reduction in total expenses, contributing to a 9% increase in its consolidated net profit.

The company anticipates improved volume growth across its segments and robust margins in the March quarter.

Continue Exploring: Arvind Fashions posts strong 31.87% growth in net profit for Q2

The advanced materials segment, responsible for producing fabrics and protective gear for construction work at Arvind, is anticipated to experience an export impact due to limitations in Red Sea freight movement.

After reaching a record high earlier in the day, shares reversed direction, trading down by as much as 2.6%.

Rival Shoppers Stop reported a third consecutive fall in quarterly profit earlier this month, as consumers spent less on clothes and cosmetics. Results from Tata Group-owned Trent are due to be reported next week.

FMCG companies anticipate inflation-focused measures in upcoming budget to boost consumption and rural growth

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January 30, 2024

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Despite the early signs of recovery, the FMCG industry faced significant inflationary pressures, especially in the mass consumption segment. In anticipation of the February 1st interim budget, FMCG companies expressed their anticipation of measures aimed at curbing inflation and promoting increased consumption.

Sharing his pre-budget expectations, Aasif Malbari, CFO, GCPL said, “To support more inclusive economic growth the government could consider proactive measures aimed at future controlling inflation and stimulating consumption in the larger economy. A consumption boost will lead to a cycle of sustained economic growth in the long run.”

Underscoring the significance of favorable rural policies in the 2024 budget, Shammi Agarwal, director of Pansari Group, emphasized that prioritizing rural policies is crucial for easing the strain on consumption within these markets.

“We anticipate a particular emphasis on boosting rural consumption in the budget. This could manifest in various ways, including additional sops for women and marginalized communities to stimulate consumption ahead of the general elections,” he added.

Emphasizing the goal of enhancing consumption, industry leaders stressed the importance of creating rural employment, investing in infrastructure and agriculture, providing incentives for capital expenditure, and promoting research and development. These measures are expected to have a multiplier effect on the rural economy, ultimately fostering heightened consumption.

Anticipating the government’s focus on agriculture in the upcoming budget, Angshu Mallick, MD and CEO, Adani Wilmar said, “New policies are anticipated that safeguard the interests of oilseed farmers and the oleochemical industry while effectively addressing challenges faced by rural communities. This, in turn, will have a positive ripple effect on industries connected with rural landscapes.”

Continue Exploring: Budget 2024: India mulls allocating $48 Billion for food and fertilizer subsidies

Additionally, Mallick suggested that placing imports such as palm oil, stearic acid, soap noodles, oleic acid, and refined glycerin in the restricted-items list or imposing a 25 percent import duty on finished products instead of raw materials would contribute to establishing a fair and equitable environment for manufacturers.

Highlighting the importance of agricultural measures, Manish Aggarwal, director of Bikano, Bikanervala Foods, emphasized their significance for the development of rural areas and overall business expansion. Acknowledging the potential for increased funding for the Agriculture Accelerator Fund, Aggarwal expressed the belief that such a step would enhance storage solutions and advance farming practices through new technology, ultimately benefiting both farmers and the broader FMCG sector.

Addressing the anticipated developments in the direct selling industry, Gautam Bali, Managing Director of Vestige Marketing, a company specializing in health and wellness FMCG products, expressed the industry’s anticipation of regulatory frameworks and policies that can consistently reinforce ethical business practices. Additionally, he emphasized the necessity of introducing social security schemes for gig workers.

Continue Exploring: Apparel exporters lobby for tax incentives and GST uniformity in budget 2024 to stimulate domestic manufacturing

Swiggy reports robust 40% revenue growth to INR 8,264 Cr in FY23, despite net loss crossing INR 4,000 Crore mark

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January 30, 2024

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Swiggy, the Bengaluru-based food delivery giant, saw its net loss cross the INR 4,000 Crore threshold for the financial year ending on March 31, 2023. Supported by Invesco, this decacorn incurred a net loss of INR 4,179.3 Crores in the fiscal year 2022-23 (FY23), reflecting a 15% increase from INR 3,628.9 Crores in the previous financial year.

Swiggy experienced a significant surge in its operating revenue, with a growth of more than 40% to INR 8,264.4 Cr in the year under review, compared to INR 5,704.9 Cr in FY22. This increase can be attributed to the expansion of its quick commerce vertical during the same period.

Established in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, and Rahul Jaimini, Swiggy originally began as a food delivery startup. Subsequently, amid the pandemic, it introduced its quick commerce vertical – Swiggy Instamart. Additionally, Swiggy provides services such as Swiggy Genie and Minis store.

Swiggy generates income through its online platform services offered to partner merchants, which include restaurant merchants, grocery merchants, and delivery partners. Additionally, the company earns revenue through advertisement services, the sale of food and traded goods, subscriptions, and other related platform services.

Swiggy’s Cost Breakdown:

In the fiscal year 2023, the startup achieved a revenue of INR 3,221.4 Crores by retailing FMCG products through Swiggy Instamart, marking a 39.7% growth compared to the INR 2,035.6 Crores earned in the preceding fiscal year.

It also generated INR 4,413.9 Crores from service sales, reflecting a 28% growth from the INR 3,444.4 Crores recorded in FY22. However, Swiggy did not disclose a detailed breakdown of this revenue.

The foodtech giant witnessed a surge of over 35% in expenditure, reaching INR 12,884.4 Crores in FY23, compared to INR 9,574.5 Crores in the preceding fiscal year.

The procurement cost for the startup experienced a 49% increase to INR 3,380.9 Crores in FY23 from INR 2,268.1 Crores in the previous fiscal year. This cost encompasses the expenses associated with acquiring FMCG products for Swiggy Instamart.

In FY23, the outsourcing support cost for the startup increased by 34% to INR 3,159.3 Crores, up from INR 2,350.2 Crores in the preceding fiscal year. This expenditure may encompass employees on third-party payrolls, including delivery executives and personnel operating in dark stores.

During the reviewed period, Swiggy allocated INR 2,361.7 Crores to advertising, marking a 28% increase from the INR 1,848.7 Crores spent in FY22. In simple terms, Swiggy generated INR 3.4 for every rupee invested in advertising.

The costs associated with employees rose by 25% to INR 2,129.8 Crores in FY23, up from INR 1,848.7 Crores in FY22.

In FY23, the startup incurred INR 139.5 Crores in losses due to order cancellations, representing an 11% decrease from the INR 156.4 Crores recorded in the previous fiscal year.

The release of financial statements follows recent reports indicating Swiggy’s plan to reduce its workforce by approximately 400 employees. This move is seen as part of the foodtech giant’s strategy to enhance its financial performance ahead of filing draft papers for its upcoming initial public offering (IPO) later this year. Swiggy aims to raise $1 billion (INR 8,300 Crores) through the IPO.

Continue Exploring: IPO-bound Swiggy initiates workforce reduction, plans to cut 6% of jobs to enhance profitability

Last year, the startup asserted that it had attained profitability in its food delivery operations by March 2023. CEO Majety stated that the foodtech giant stood among the limited number of global food delivery platforms to reach profitability, although the company did not disclose specific figures.

Just last week, Swiggy extended its food delivery services to the city of Agatti in Lakshadweep, the union territory that gained prominence following Prime Minister Narendra Modi’s visit earlier this month.

Continue Exploring: Swiggy breaks new ground: Becomes the first food delivery platform to launch services in Lakshadweep

In recent times, Swiggy has witnessed several notable departures, with key figures such as Karthik Gurumurthy (senior vice president and head of Swiggy Instamart), Dale Vaz (CTO), Anuj Rathi (SVP, central revenue and growth), Ashish Lingamneni (VP, marketing), and Dineout co-founder Vivek Kapoor among those who have exited the company.

With a valuation over $10 billion, the startup has raised more than $3 billion in funding and is supported by notable backers like SoftBank, Invesco, Prosus Ventures, DST Global, among others. It competes with Zomato, which has reported two consecutive profitable quarters in FY24.

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Swiggy’s Cost Breakdown: