Online Grocery Firm Grofers Denies Merger Talks Wtih BigBasket

By Pritish Raj

New Delhi: Online grocery firm Grofers has denied holding merger talks with larger rival BigBasket, saying "just one meeting about business" last year between the two had been blown out of proportion.

Grofers founder and Chief Executive Alibinder Dhindsa said the company is focusing on growing its business as the online grocery segment is still at the nascent stage.

Softbank-backed Grofers and BigBasket had reportedly been in talks for a potential merger that would have created one of the largest online grocery players, competing with the likes of Amazon.

"It was not (merger) talks, there was just one meeting about how the business is going and it just got blown out of proportion because of different reasons," Dhindsa told PTI.

Emphasising that they never had talks regarding the merger, he said: "Right now, business is going good for us, we are going at a pretty good pace. So, why would we want to do any of that?"

Grofers, which has so far raised USD 160 million, is looking to take its revenue to about Rs 1,000 crore in 2017- 18, betting big on investments and technology advancement in its warehouses and targeting new customers. In 2016-17, it had reported a revenue of Rs 235 crore.

"In 2018, we will probably end up touching Rs 1,000 crore topline revenue. That's the target even if we grow at the current pace," Dhindsa said, adding that two big areas of investment for the company are warehousing for supply chain and automation inside to process the order at a quicker pace.

He further said the company would be investing about USD 5 million in warehousing expansion in 2018.

The company claims to have about 30 per cent market share of the USD 600 million online grocery market and is looking to further expand its footprint in the country.

"Online grocery market in India is still small at about USD 600 million. We have close to 30 per cent market share in that, and the share has been growing as a result of the infrastructure that we are putting in place to reach more customers," Dhindsa said.

He further said: "We have tripled our revenue from February this year till now and maintained our topline in nine months while maintaining the same bottomline, not increasing our losses."

The firm works with 1,400 brands and sells 10,000 products through its platforms serving about 4 lakh customers every month.

With people becoming comfortable in buying even milk and bread online, the online grocery segment is projected to witness a strong growth over the next few years in India.

According to a report by Franchise India, the online grocery market is expected to be Rs 2.7 billion market by 2018-19.

Industry watchers believe that grocery would become bigger than electronics and fashion, categories that currently dominate online purchases.

Grocery delivery is a cash—intensive business as players operate on wafer—thin margins and often end up losing money on delivery. Some players like Snapdeal-backed PepperTap have already shut shop. (PTI)