Amid Plunge In Stock, Zomato To Set Up NBFC & Invest In 2 Tech Companies

Amid a plunge in its stock price post IPO, which recently saw it falling to a 1-year low of close to ?84 about a week ago, restaurant aggregator and online food delivery company Zomato has taken two key decisions to strengthen its business and financial position.

The NBFC Set Up

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Zomato has decided to foray into the financial services business by setting up a non-banking finance company (NBFC) as a wholly-owned subsidiary for the purpose.

The proposed paid-up capital of NBFC will be ?3 crore, while the authorized capital is expected to be pegged at ?10 crore. As per the filing with BSE, Zomato said the name of the NBFC is being finalized, subject to approval by the Ministry of Corporate Affairs.

The new wholly-owned subsidiary would also need India¡¯s Central Bank RBI¡¯s approval to carry on the financial services business.

Earlier in December 2020, Zomato had signed a pact with InCred, a non-banking finance company, under which the latter would extend loans to restaurant partners.

And with this decision to set up NBFC, Zomato is expected to extend credit to its stakeholders such as restaurants, delivery partners as well as customers.

Also Read: Zomato Rival Swiggy Turns Into A Decacorn With $10.7 Billion Valuation After Latest Funding

Zomato¡¯s Two New Investments

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Also Read: Swiggy & Zomato Discounts Set To Come Under Taxman Scrutiny From January 2022

Another key decision taken by Zomato is of investing in two tech companies- Ad tech firm Adonmo Pvt Ltd and B2B software platform UrbanPiper Technology. This is viewed as a part of its larger plan to deploy $1 billion across startups.

Zomato has invested $5 million in UrbanPiper as part of a larger $24 million round to pick up a 19% stake in it, and $15 million in Adonmo to acquire a 5% stake.

According to Zomato, 80% of restaurants still use manual processes to process order deliveries leading to delay in order flow and errors in order processing.

So, through its stake pick up in UrbanPiper, which was founded in 2016 to provide a software platform that enables restaurants to integrate with multiple players through a single digital interface, Zomato believes that UrbanPiper will offer the technology to restaurants to enhance their food-delivery capacity.

Currently, UrbanPiper claims to be processing 12 million orders a month at over 23,000 restaurant locations in the country.

Adonmo, on the other hand, which too was launched in 2016, is an ad-tech company that is taking targeted digital advertising beyond personal devices to outdoor digital screens. Adonmo¡¯s proprietary technology enables cloud-connected digital screens with contextual and targeted advertising capabilities.

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Zomato¡¯s Statement

As per Zomato¡¯s statement "Both UrbanPiper and AdOnMo investments are synergistic to our core business and will help accelerate the growth of these companies which will help in filling important gaps in the food ordering and delivery ecosystem in India.".

While Adonmo had reported a turnover of ? 3.27 crore as of March 31, 2021, the other company in which Zomato has invested, i.e. UrbanPiper had a turnover that stood at ?6.34 crore during the period.

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