Deepinder Goyal, founder and CEO of food delivery firm Zomato, said the company would not do any more minority investments as it is in a cash conservation mode.
Referring to the criticism around capital allocations and minority investments in the last one year, Goyal said those investments are ‘driving tremendous strategic value today’ and that the company stands by all decisions made in the past.
“Having said that, there is no plan to make any more minority investments as we are in cash conservation mode, and are busy executing what we already have on our plates right now,” he said in a letter announcing the first quarter results.
The Gurugram-based company has made minority investments in a slew of companies such as logistics platform Shiprocket, savings app Magicpin and fitness start-up Curefit besides acquiring instant grocery startup Blinkit for Rs 4,447 crore.
Goyal said the company owns zero restaurant brands or cloud kitchens, and has no investments or financial interest in any restaurant brand or kitchen. Zomato has also shut down many lines of business, cities and even country operations that no longer made sense, he added.
“Our focus on profitability has sharpened over the past few months with the change in market context, without compromising our focus on growth. We are doing that by assessing everything with a critical lens and allocating resources by taking a long-term view to sustainable growth, as well as profit,” Goyal said.
Akshant Goyal, Chief Financial Officer, Zomato said the company is seeing a negative impact on the demand side while on the cost side, margins are affected due to higher fuel costs and wage inflation.
The duo also addressed the criticisms over the corporate governance with regards to the Blinkit transaction. The allegations were around the valuation it paid for Blinkit and the fact that Albinder Dhindsa, founder of Blinkit, is married to Zomato co-founder Aakriti Chopra.
Goyal said the company had conducted rigorous and detailed due diligence, deliberations and negotiations before agreeing to the terms of the transaction besides consulting with multiple external advisors EY and Morgan Stanley.
“We negotiated hard on valuation but at the same time, had no intention to be opportunistic since it is important to be fair to the team on the other side who is going to build this business going forward,” he added.
He said the relationship between Dhindsa and Chopra is public and the board and Chopra herself ensured that she was never involved in any discussions or decisions with respect to the transaction.
“This transaction also had no overlap with her role as Chief People Officer at Zomato. We also took an independent opinion from Saraf & Partners on there being no related party transaction under applicable law,” he added.
Zomato Ltd said on Monday its quarterly loss narrowed, helped by an increase in orders for restaurant meals on its platform. Its net loss was at Rs 186 crore for the quarter ended 30 June, 2022. The company had posted a net loss of Rs 356 crore year ago. Its revenue from operations came in at Rs 1,413.9 crore, up 67.44 percent against Rs 844.4 crore logged in the year-ago quarter.
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