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Walmart targets $10 Billion annual exports from India, with toys taking center stage

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M Haziq Pandit
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Walmart
Walmart

Walmart, the prominent US retail giant, aims to boost its annual exports from India to $10 billion, with a notable share attributed to domestic toys, according to a senior government official on Thursday.

Sanjiv, the Joint Secretary at the Department for Promotion of Industry and Internal Trade (DPIIT), mentioned that the American company recently conducted a workshop involving 100 Indian toy manufacturers. The objective is to establish a supply chain for exporting toys from India.

“Walmart has given a target of $10 billion exports from India and in that they are going to have toy exports as a significant portion,” he said.

Continue Exploring: Walmart ramps up exports from India to reduce dependence on China

The company had earlier informed toy makers about their requirements and expected quality standards.

Walmart’s Commitment: Tripling Exports by 2027

In December 2020, Walmart pledged to triple its annual exports of goods from India to $10 billion by 2027, offering a substantial uplift to micro, small, and medium-sized enterprises (MSMEs) in the region.

International retail giants like IKEA are currently procuring toys from India to support their global operations.

This development is noteworthy and underscores India’s increasing prowess in the toy industry, particularly considering that the country used to be a net importer of toys just a few years ago.

Sanjiv said that at present India is exporting toys to all countries, including the EU, and the US.

He added that inter-ministerial consultation and participation have helped in making toys, a successful story in India.

He informed that 14 departments, including education, tourism, and information technology, have been assigned 21 tasks to promote the growth of the sector.

“Each one of them has been assigned a work in respect of their ministry,” he said.

There are four themes of the National Action Plan for Toys (NAPT), including promoting trade and investments; design and quality; and promoting indigenous toys.

As many as 32 toy clusters have also been identified where artisans have been provided government support.

Compared to 2014-15, toy imports have dipped by 52% and exports rose by 239% in 2022-23.

A study was also conducted by the Indian Institute of Management (IIM) Lucknow on the ‘Success Story of Made in India Toys’ at the behest of the DPIIT.

According to the report, the efforts of the government have enabled in creation of a more conducive manufacturing ecosystem for the industry.

It highlighted that from 2014 to 2020, these efforts have led to the doubling of the number of manufacturing units and a reduction in dependence on imported inputs from 33% to 12%.

India is also emerging as a top exporting nation due to the country’s integration into the global toy value chain, along with zero-duty market access for domestically manufactured toys in countries, including UAE and Australia.

To position India as a viable alternative to current toy hubs of the world (China and Vietnam), consistent collaborative efforts of the toy industry and the government are essential for advancements in technology, embracing e-commerce, encouraging partnerships and exports, and investing in brand-building, the report stated.

The government has formulated a comprehensive NAPT having 21 specific action points, and implemented by 14 central ministries/departments, with DPIIT as the coordinating body.

Basic Customs Duty (BCD) on toys was increased from 20% to 60% in February 2020, and subsequently to 70% in March 2023. The Directorate General of Foreign Trade (DGFT) has mandated sample testing of each import consignment to curb the import of sub-standard toys.

A Quality Control Order (QCO) for toys was issued in 2020, with effect from January 2021.

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Country Delight to secure $20 Million funding in bridge round, sets sights on $758 Million valuation

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M Haziq Pandit
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Country Delight
Country Delight

Dairytech startup Country Delight appears to be starting the new year with a bridge round, paving the way for a larger fundraising effort.

The Delhi-NCR based startup is in the process of raising around $20 million (INR 164 crore) from its existing investors, which include Singapore’s sovereign fund Temasek, Venturi Partners, and others.

Country Delight’s board has approved a resolution to allocate approximately 78,000 Pre-Series E CCPS (Compulsory Convertible Preference Shares) to its existing investors, including Temasek, Venturi Partners, and others.

According to estimates, the startup is raising a new round at a valuation of approximately $758 million. In its previous Series D funding round of $108 million, the valuation stood at $615 million.

Additionally, there is a chance that the funding round might increase as more investors express interest and join in.

Established in 2013 by Chakradhar Gade and Nitin Kaushal, Country Delight operates on a subscription-based model, sourcing milk from farmers and delivering it directly to customers’ doorsteps. In addition to milk, the company also provides bread, ghee, various dairy products, as well as fruits and vegetables.

Up until now, the startup has secured nearly $158 million (excluding the ongoing funding round) through various funding rounds. Among its notable investors are Temasek, Matrix Partners, Orios Ventures, and Elevation Capital.

Financial Performance of Country Delight:

In the fiscal year 2022, the startup witnessed a more than 6-fold increase in its net loss, rising to INR 186.4 crore from INR 28.2 crore. Meanwhile, the revenue from operations surged by over 1.7 times, reaching INR 542.6 crore.

Continue Exploring: Country Delight posts staggering 6X increase in FY22 losses, reaching INR 186 Crore

It is important to note that the startup derives its revenue from the sale of various products, including milk, curd, paneer (cottage cheese), ghee, eggs, fruits, vegetables, and coconut water.

Last year, during a summit, Gade mentioned that the startup would achieve profitability in the near future.

“We are currently an almost $200 Mn revenue company, and the business is growing at 5-7% month-on-month. We are on the clear path to profitability in the next 8-10 months,” he said.

Nevertheless, the startup has not yet submitted its financials for the fiscal year 2023.

Country Delight not only competes with prominent traditional players like Mother Dairy, Nandini, and Amul but also with emerging players such as Odisha-based Milk Mantra and Reliance-acquired Milk Basket.

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Controversy erupts amid Mahanand Dairy’s NDDB transfer, farmers and opposition claim move benefits Amul

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M Haziq Pandit
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Mahanand Dairy

Claiming that the state government is attempting to support Amul in expanding its influence in Maharashtra by transferring the state’s cooperative milk brand Mahanand to the National Dairy Development Board (NDDB), farmers’ organizations and opposition political parties have voiced their opposition to the decision.

The board of directors at Mahanand Dairy has approved a resolution to transfer control of Mahanand to the NDDB.

“The decision to hand over Mahanand to NDDB is against the interest of the state’s farmers. It will only help Amul expand in Maharashtra. The Maharashtra government should have saved Mahanand to help farmers get better realisation for their milk,” said Ajit Nawale, leader of the Akhil Bharatiya Kisan Sangh.

Mahanand Dairy operates under the Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit (MRSDMM), the apex federation of milk cooperatives at the district and block levels in the state, established during Operation Flood in 1967. Amul, on the other hand, is the brand associated with the Gujarat Co-operative Milk Marketing Federation (GCMMF), a federation encompassing all milk cooperatives from Gujarat.

In contrast to Gujarat and Karnataka, Maharashtra lacks a singular prominent milk brand in the co-operative sector. The state is home to over 300 milk brands, spanning both the private and co-operative sectors. The intense competition among these brands for a significant market share results in substantial margins granted to distributors, ultimately translating to lower prices for farmers.

“The state governments of Karnataka, Kerala and Tamil Nadu have developed their own co-operative milk brands Nandini, Milma and Avin, respectively, and opposed the entry of Amul in their states,” said Nawale.

Continue Exploring: Amul vs Aavin: Fresh controversy erupts as dairy giant faces Tamil Nadu firefight, following recent Karnataka row

The opposition parties, Shiv Sena and Congress, allege that the decision to hand over Mahanand to NDDB is intended to favor Gujarat’s Amul.

Challenges Faced by Mahanand Dairy:

Mahanand has transformed into an unprofitable entity, struggling to meet the salary obligations of its employees. While it once achieved a peak daily milk collection of 11 lakh litres, the dairy now only collects 70,000-90,000 litres of milk per day.

As per insiders in the dairy industry, Mahanand faced challenges such as operational inefficiencies and excessive staffing due to political patronage. The dairy struggled to disburse salaries to its employees for several months.

“We have proposed that the current board of directors be retained after handing over Mahanand to NDDB,” said an office bearer of Mahanand, who requested not to be identified.

Earlier, Maharashtra had handed over Jalgaon Milk Co-operative to NDDB, which then made it profitable and subsequently returned it to the local management.

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Global apparel and fast fashion giants buck trend with 40-60% sales surge among young consumers in FY23

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M Haziq Pandit
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apparel
(Representative Image)

Leading global apparel and fast fashion brands seem to have resonated strongly with the younger demographic, achieving sales growth ranging from 40% to 60% in FY23. This stands out in a market where the overall demand for discretionary products has decelerated.

For instance, H&M, the Swedish fashion retailer, and its counterpart Zara both saw a 40% surge in their top-line figures. In the same period, Uniqlo, the Japanese brand, experienced a substantial 60% increase in sales. Levi Strauss, the American denim maker, and Marks & Spencer, the British brand, reported a noteworthy 54% growth in their revenues according to the latest filings with the Registrar of Companies. Lifestyle International, the Dubai-based department store, also witnessed a significant 46% rise in revenues, considering its already substantial base. Collectively, these brands achieved a combined annual revenue of nearly $2.6 billion, more than double the FY21 figure of $1.1 billion.

“With consumers getting brand conscious, global brands have a natural advantage. There is a distinct aspirational momentum for international brands that carries them through. Also they can sustain having unsold inventory and discounting better than smaller peers,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm.

“Also, these brands have not yet reached saturation point in terms of network and hence can invest further to widen their reach,” he added.

Apparel Brands Adapt to Online Trends:

The increase in revenue was additionally driven by brands redirecting their attention to e-commerce, which presently constitutes over a quarter of their sales. This shift occurs amid heightened competition from both local and global rivals in an increasingly saturated market, where web-commerce firms persist in providing substantial discounts. Over the last two years, the growth in sales for most retailers has been primarily price-driven, marking a departure from the historical pattern where volumes or actual demand played a predominant role in driving the majority of sales.

The fashion retail sector has been grappling with a decrease in demand since January of last year, primarily attributed to inflationary challenges. The general retail expansion decelerated to 6% in both March and April, showing a slight uptick to 9% in August and September. However, it subsequently dipped to 7% in October and November, as reported by the Retailers Association of India.

“Spends are shifting to experience, holidays and big ticket purchases such as cars. Stronger retailers which had the right product to price proposition works for consumers who are not necessarily looking at brands from global and local lens. What helped our sales was product rationalisation, renovation of stores as well as our value proposition,” said Manish Kapoor, managing director at Pepe Jeans that clocked 54% growth to INR 560 crore in FY23.

“The current fiscal has been muted and we expect election spending and improved sentiment to drive recovery next fiscal,” he added.

Being the second most-populated country globally, India presents an appealing market for aspirational apparel brands. The expansion of disposable incomes has led to a broader consumer base at the pyramid’s bottom, enhancing the attractiveness of the market.

“The Indian economy is on course to be among the top economies in the world. The key factors driving the India consumption story include a large proportion of young population, rising urbanization, growing affluence, increasing discretionary spending and deeper penetration of digital,” said Levi Strauss in its latest annual report.

Last year, Levi’s said that India is now their largest market in Asia and the sixth largest globally. Meanwhile, Marks & Spencer (M&S) announced its initiative to open a store every month in India, establishing it as their most extensive international market outside their home country in terms of store network.

Continue Exploring: India’s apparel exports on the rise: CMAI forecasts 10-15% YoY growth in UAE market

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Zomato halts Blinkit integration, prioritizes development of super brands

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M Haziq Pandit
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Zomato
Zomato

Zomato, a foodtech major, has reportedly decided to put a halt to the integration of its quick commerce arm Blinkit. The company aims to shift its focus towards building super brands.

The directive from Zomato’s founder and CEO, Deepinder Goyal, to the company’s top management is to concentrate on developing “super brands” instead of “super apps,” as per a report by ET.

“In India, super apps haven’t proven as successful as they have in China and Indians lean towards super brands,” said Goyal.

Zomato’s approach is evident in its decision to maintain a distinct separation between its food delivery platform and quick-commerce unit. The focus is on developing Blinkit as an independent brand.

Ever since Zomato’s acquisition of Blinkit, there has been anticipation surrounding the integration of both apps into a unified platform. This is particularly notable, considering that its competitor, Swiggy, incorporates quick commerce service Instamart directly within its main app.

Zomato’s Blinkit Acquisition:

In 2022, Zomato acquired the quick commerce startup Blinkit for INR 4,447 Cr ($568 Mn) through an all-stock transaction. Following the acquisition, Zomato’s management communicated to analysts that the integration of Blinkit, with a specific focus on its delivery fleet, would enhance operational efficiencies. This strategic move is expected to play a significant role in advancing the publicly listed company towards profitability.

Nevertheless, as per sources cited by ET, there has been a shift in the current strategy. Zomato has now chosen to prioritize the integration of Blinkit into the company by seeking synergies with its business-to-business supplies vertical, Hyperpure. Moreover, users will find a dedicated tab on the Zomato app that directs them to the Blinkit app.

“At a corporate level, the message is to build brands and the most meaningful synergies are being driven — between not just food and Blinkit but also among the different verticals that the broader organisation runs — are happening mainly on the backend to ensure it doesn’t impact customer experience,” a senior executive told ET.

On the flip side, Swiggy, Zomato’s primary competitor, has opted for the integration of its quick commerce vertical, Instamart, directly within its main app. Swiggy is strategically utilizing its loyalty program and robust delivery fleet, backed by investments surpassing $700 Mn, to fortify its standing in this particular business segment.

Blinkit achieved positive contribution for the first time in the quarter concluding on September 30, 2023 (Q2 FY24).

In the shareholder letter accompanying the financial statements for Q2 FY24, Zomato stated that Blinkit’s contribution margin, calculated as a percentage of gross order value (GOV) within the entire business, progressed from -7.3% in Q2 FY23 to +1.3% for the quarter concluding on September 30, 2023.

Continue Exploring: Blinkit records first positive contribution, anchoring Zomato’s quick commerce success

During Q2 FY24, Blinkit registered 45.5 Mn orders, reflecting an increase of almost 24% quarter-on-quarter (QoQ) from the 36.8 Mn in the preceding quarter. Additionally, there was a substantial year-on-year (YoY) growth of 74.3% compared to Q1 FY23, where it recorded 26.1 Mn orders.

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6 Indian restaurants shine in Taste Atlas’ Top 100 Legendary Eateries, with three breaking into top 10 globally

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M Haziq Pandit
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Indian cuisine

Taste Atlas, a renowned food and travel guide, has just released its list of the 100 most legendary restaurants worldwide for 2023-24. Among them, six iconic Indian restaurants are featured, with three securing positions in the top #10 legendary restaurants globally.

Paragon in Kerala: Taste Atlas Ranks #5 Globally for Iconic Biryani:

Ranked at #5 globally, the renowned Paragon restaurant in Kerala is celebrated for its legendary Biryani. According to Taste Atlas, it is hailed as the provider of the “most iconic Biryani in the world.” The restaurant is also celebrated for its Malabar chicken biryani and Paneer tikka.

Following Paragon on the list is Tunday Kababi from Lucknow, Uttar Pradesh, securing the #6 spot among the 100 most legendary restaurants worldwide. Renowned for its Galouti kebab, intricately prepared from finely ground keema (lamb or mutton mince), Tunday Kababi’s Galouti kebabs are a burst of flavors, exceptionally tender, and effortlessly melt in your mouth.

Claiming the #10 spot is Peter Cat in Kolkata, West Bengal, renowned for its legendary kebabs. The standout dish is the Chelow kebab, a creative variation of the Iranian beef kebab, where mutton and chicken replace the traditional beef, adding a distinctive twist to the renowned dish.

At the 16th spot, you’ll find the legendary Amrik Sukhdev Dhaba in Murthal, Haryana, renowned for its Aloo Paratha. This iconic eatery is also celebrated for its delectable serving of Chole Bhature.

Catering to idli enthusiasts, Mavalli Tiffin Rooms, affectionately known as MTR and positioned at 32 on the list, is another iconic Indian restaurant located in Bengaluru, Karnataka. Renowned for its delectable Rava Idli and Bisi Bele Bath, a flavorful rice masala dish, MTR has secured its well-deserved fame.

Finally, we have Karim’s from the national capital, securing the #84 position. This legendary establishment is renowned for its Mutton Korma, a delightful dish where mutton is slow-cooked with yogurt, spices, and ghee.

Continue Exploring: From Mumbai’s irresistible chaats to Hyderabad’s iconic biryani: Indian cities shine in global culinary rankings

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Dabur anticipates mid to high single-digit growth in Q3, fueled by robust performance in foods and beverages sector

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M Haziq Pandit
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Dabur
Dabur

Consumer goods manufacturer Dabur announced in its third-quarter update on Thursday that it anticipates a mid to high single-digit growth in consolidated revenue, showing a slight improvement compared to the preceding July-September quarter.

The producer of Real juice, Hommade condiments, and chyawanprash indicated in a filing to the stock exchanges that its foods and beverages segment is expected to spearhead growth in the quarter. This segment typically performs exceptionally well in the October-December quarter, primarily due to the festive season and the success of its juices portfolio.

Dabur reported that the third quarter surpassed expectations, attributing the positive performance to the acquired Badshah masala franchise and its international business.

Continue Exploring: Dabur eyes global spice market with Badshah, aiming for 4% contribution to global sales

While the company generates nearly half of its yearly sales from rural India, it highlighted ongoing concerns about demand in these areas. Rural demand has consistently trailed behind urban demand, although there has been a reduction in the gap during the last quarter. Analysts predict that demand in the December quarter is likely to remain weak.

Despite the moderation in diesel and fertilizer costs, which bodes well for the rural segment, Abneesh Roy, the executive director of Nuvama Institutional Equities, noted in a report this week that volume growth would continue to pose challenges for most players in the December quarter and possibly even in the fourth quarter.

On a nationwide scale, Dabur observed that gross margins are poised to increase, driven by easing inflation and cost-saving measures. It emphasized that a substantial part of the gross margin expansion will be directed towards boosting advertising and promotional expenditures. As a result, the operating profit is anticipated to grow slightly faster than revenue, leading to an improvement in year-on-year operating margins.

Dabur’s Segment Projections:

The company stated that its foods and beverages segment is anticipated to experience high-single-digit growth, while its home and personal care portfolio, encompassing Vatika shampoo, is projected to achieve mid to single-digit growth.

“Because of the delay in onset of the winter season, the health care business is expected to grow in low to mid single digits,” Dabur said in its filing.

In its update, Dabur mentioned that the acquisition of the Badshah masala franchise would contribute to volume growth. Additionally, the brand is expected to drive robust volume-led growth in the high twenties.

“The international business is expected to register double-digit growth in constant currency terms, led by good momentum,” Dabur noted.

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India’s rising cocktail culture: Niche bars thrive beyond metros, offering unique concepts and flavors

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M Haziq Pandit
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Cocktail

Just like India’s indigenous single malts are making waves globally, India’s pub and bar scene is coming of age too, and rising aspirations are pushing the entry of niche cocktail bar concepts in smaller towns as well.

Delhi’s Sidecar has experienced a 60% increase in revenues and a 35-45% growth in profits from 2021 to 2023, according to Yangdup Lama, co-owner of Sidecar and India’s leading mixologist.

Continue Exploring: Indigenous spirits shine: India’s liquor exports soar, set to break $1 Billion barrier

Last year, Sidecar secured the 18th position on Asia’s 50 Best Bars list and was ranked 52nd on the list of top 500 bars.

“Sidecar has gone beyond what we expected in terms of numbers, in terms of cocktail sales. In India, there’s a place for all kinds of original concepts now and we will open our new venture in the next six months in Gurugram. It will be a new concept,” said Lama.

“Investors are also open to partnering with bartenders like me to launch concepts just like they would have done in the past with chefs. This never happened before in my career of 27 years. Customers have a lot more clarity now and are more evolved,” he added.

Niche Cocktail Concepts Flourishing in Jaipur:

In Jaipur’s market, various niche concepts have emerged, including the Native Cocktail Room, which claimed the top spot in Bar Wars 2023 and earned a spot in the 50 Best Bars India list. Among the signature cocktails offered are “Jodhpur,” featuring smoky tequila blended with cumin, mathinia chilli syrup, ananaas, and citrus, and “Zafran Sour,” a fusion of Kesar vodka, salted caramel, orange bitters, and citrus.

“Trends swiftly disseminate through the influence of digital media, and with beer’s universal appeal, enthusiasts are now spread across the nation. Beyond the NCR, Bengaluru, Mumbai and Pune, the upcoming year will witness the opening of Taprooms in Ludhiana, Mohali, Jaipur and Manali,” said Rahul Singh, head of the pubs vertical at BIRA 91.

“The upcoming year is poised for a quadruple increase in the number of outlets,” he added.

Having spent fifteen years in the industry, Mayur Marne, the pub partner at Cobbler & Crew in Pune, expressed that he is currently living his dream. Marne previously served as the luxury brand ambassador for Diageo India and was affiliated with Hakkasan Mumbai.

“I am from Pune and always wanted to open a bar here. We launched Cobbler & Crew in September 2022, and the response has been good so far. Our cocktail philosophy is all about using local ingredients and no artificial sugars are used in our drinks,” he added.

In September last year, Impresario Entertainment & Hospitality unveiled the Drawing Room, a cocktail-forward concept at its Smoke House Deli outlet in Bengaluru.

Mohit Balachandran, Brand Head at Smoke House Deli, noted that unlike other Smoke House Deli outlets that employ traditional mixology, the Drawing Room adopts a more ‘forward’ approach, incorporating advanced techniques.

“We thought of converting some of our spaces into more cocktail forward spaces. We have plans of launching the next Drawing Room in Mumbai,” he said.

Among the signature cocktails at The Drawing Room are “Through the Looking Glass,” a fusion of Ballantine’s Finest scotch, grapefruit, basil, honey, ginger, and lemon soda, as well as “Timekeeper’s Smoke,” crafted with Jose Cuervo Tequila, Cointreau l’Unique, French orange liqueur, cold-pressed oranges, smoky Lapsang Souchong tea, and Himalayan Pink Salt.

Last year, The Leela Palace Bengaluru introduced ZLB23, a Speakeasy bar styled after Kyoto, showcasing an array of ‘rare and premium’ spirits.

ZLB23 hosted a series of exclusive bar takeovers in December last year, featuring the Manhattan bar from Singapore and Bar Benfiddich from Tokyo.

MayFair Consultants’ founder, Deepak Jain, stated that his company holds a mandate for specialized and high-energy bars in markets including Chandigarh, Dehradun, Udaipur, Agra, and Moradabad.

“This is primarily due to the affordability of real estate rentals as well as high spending power of consumers,” he said.

Continue Exploring: Winter’s Warm Embrace: A Gin Cocktail That’ll Steal Your Heart!

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TGI Friday’s closes 36 restaurants in the US, sells 8 to former CEO Ray Blanchette amid ongoing transformation

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M Haziq Pandit
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TGI Friday's

The casual dining chain TGI Friday’s has closed 36 restaurants in the United States and has reached an agreement to sell eight additional ones to former CEO Ray Blanchette as part of its ongoing transformation.

The development comes after the appointments of Weldon Spangler as CEO and Ray Risley as U.S. President and COO in November.

CEO Shuffle at TGI Friday’s in 2023:

Spangler became the fourth person to assume the role of CEO in 2023. The swift sequence of changes began in May when Blanchette parted ways with the company, temporarily handing over the position to Rohit Manocha, co-founder of the casual-dining chain’s principal investor, TriArtisan Capital Advisor, as reported by Restaurant Business Online.

In late August, Manocha stepped down from the position, and Brandon Coleman III assumed the role. However, Coleman resigned after two months, citing unspecified personal reasons. Spangler assumed the role in October.

As per the reports, the amount paid by Blanchette for the eight Fridays stores was not disclosed. The chain mentioned that all of the units are located in the Northeast.

The announcement indicates that Blanchette will continue to operate the restaurants as franchised Fridays stores.

Blanchette has previously served as CEO at Ruby Tuesday, Au Bon Pain, and Ignite Restaurant Group—the parent company of Joe’s Crab Shack, Brick House Tavern, and Romano’s Macaroni Grill.

The 36 closed stores, characterized by Fridays as “underperforming,” were situated in various markets across the U.S. Local news reports suggested that several of them were in Massachusetts.

Fridays stated that 1,000 employees affected by the closures, constituting 80% of the combined payrolls, have been provided with transfer opportunities to other stores.

“Our top priority has always been delivering a superior experience for each and every TGI Fridays guest, and we’ve identified opportunities to optimize and streamline our operations to ensure we are best positioned to meet – and exceed – on that brand promise,” shared Risley in a statement.”

Following this transaction, Fridays will now operate approximately 650 restaurants across 51 countries.

Continue Exploring: Sydney’s Burger Head chain shuts down due to Economic Strain and Rapid Growth

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Zomato announces liquidation of Vietnamese and Polish subsidiaries as global restructuring continues

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M Haziq Pandit
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Zomato
Zomato

Following the dissolution of its various global subsidiaries in 2023, the restructuring effort continues for the food tech giant Zomato, even as we enter 2024.

In a filing on Thursday (January 4), the company announced that Zomato Vietnam Company Limited (ZVCL), a subsidiary of Zomato Limited located in Vietnam, has initiated the process of liquidation.

In the filing, Zomato highlighted that ZVCL made no contribution to the overall turnover of the company.

“ZVCL is not a material subsidiary of the company, and the dissolution of ZVCL will not affect the turnover/revenue of the company,” Zomato said.

The net worth of ZVCL amounted to INR 36 Lakh.

The development came a day after the listed food tech startup initiated the liquidation process for its Polish step-down subsidiary, Gastronauci SP. Z.O.O., with the subsidiary’s contribution to the company’s total turnover also being zero.

Zomato shares maintain an upward trajectory, concluding the day’s trading with a nearly 2% gain, closing at INR 129.95 on the BSE.

Zomato’s Profitability Milestones in Q1 and Q2 FY24:

In its pursuit of profitability, Zomato streamlined various facets of its operations last year, discontinuing business operations in several countries such as Indonesia, Jordan, Czech Republic, and Slovakia.

In Q1 FY24, Zomato attained profitability and sustained a trend of rising profits into the subsequent quarter, Q2.

Conversely, Zomato is currently enhancing its monetization strategies and has raised the platform fee for each order from an initial range of INR 2-INR 3 to INR 4.

Continue Exploring: Zomato raises platform fee to INR 4 per order in major cities

However, the company is currently entangled in new tax issues. Tax authorities have issued a notice of INR 4.2 Cr to the startup for alleged underpayment of goods and services tax (GST).

Continue Exploring: Fresh trouble for Zomato as tax authorities seek INR 4.2 Crore in unpaid GST

Last month, Zomato received a show cause notice amounting to INR 401.7 Cr from the Directorate General of GST Intelligence, Pune Zonal Unit, regarding unpaid taxes on delivery charges collected from customers.

Continue Exploring: Zomato receives INR 401.7 Crore show cause notice from GST authority over unpaid taxes

In light of the latest challenges faced by the company, JM Financial mentioned in a recent research report that if the conclusive order turns unfavorable for Zomato, the platform would transfer the GST burden directly to the end customers.

Moreover, Zomato holds a cash balance of INR 11,800 Cr, sufficient to offset the repercussions of any unfavorable rulings related to past dues, as noted by the brokerage.

“However, the key thing to watch out will be how long the case drags and the remedial measures that the company takes to mitigate any future tax liability demand,” it added.

Last year, Zomato shares witnessed a gain of over 100%, and many analysts now consider it a “multi-bagger stock.”

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