Grofers India, the Gurugram-based company that owns and operates an online groceries marketplace by the same name, widened its losses nearly two-fold in the financial year 2018-2019, on account of burgeoning expenses, notably in discounting charges.
Losses for the year stood at Rs 448 crore against Rs 258.3 crore in the previous year, its latest regulatory filings showed.
Discount charges, which refer to rebates and discounts the company offers to its users, increased nearly seven times to Rs 128.32 crore. Total expenses stood at Rs 531.63 crore, compared to Rs 311.77 a year earlier. A significant portion of the company’s other expenses bracket went into advertising promotions, up 50% to Rs 82.08 crore.
Operational revenues, which grew by 135% to Rs 70.11 crore, failed to overcome these expenses.
Grofers India is the online marketplace side of the business that operates the delivery of various products through its e-commerce platform. It also supports online and offline transactions on the website or through phone or mobile phones or other devices for customers in India.
Grofers India and Hands on Trades are fellow subsidiaries of the Singapore-based parent holding, Grofers Pte. Hands On Trades is the B2B arm of the business, which engages in wholesale procurement and sale of the groceries and daily essentials as well commercial and institutional users including retailers.
Hands On Trades incurred losses of Rs 160 crore in FY19, a 100 percent increase from a year earlier. In the B2B platform’s expenses, purchases of stock-in-trade also saw about a 100% increase to Rs 11,146.11 crore, from a year earlier.
In a heavily-funded vertical segment of ecommerce, Grofers alongwith rival BigBasket are undisputed leaders in the tight online grocery market in India. Softbank-backed Grofers raised $20 million in a funding round from Mumbai headquartered media conglomerate Bennett Coleman & Co via a warrant issue recently.
Walmart-owned ecommerce firm Flipkart is en route to attempt it's farm-to-fork foray with Flipkart FarmerMart, banking on its US based parent’s over half a century experience in the sector.
Supermarket Grocery Supplies, the Bengaluru-headquartered company that owns Alibaba-backed BigBasket, widened its losses nearly two-fold to Rs 562.7 crore in the financial year ended March 31, from Rs 310.3 crore a year earlier. It also continued to bear heightening expenses in advertising and promotions among other expenses.
On the other hand, Flipkart through its newly-formed FarmerMart subsidiary is all set to enter the grocery business at a time when the dominant players are fairly well entrenched in the market.