Mobile food services platform Ola Foods, which runs with the Foodpanda trademark and legal entity Pisces eServices, reported that its losses widened by 232% in its yearly financials, even as the market is rife with news that it is scaling across the cloud kitchen model.
Losses at the once-Rocket Internet entity grew to Rs 756.4 crore in the financial year ended March 2019, from about Rs 228 a year earlier, according to regulatory filings.
On the company's outlook for the next financial year, its board said in the filing that it would focus on improving customer experience and increasing market share through a diverse and comprehensive product portfolio.
“This would be supported by investment in technology, logistics and brand. Our understanding of consumer needs, driven by data science, gives us a competitive advantage in terms of customer experience, while increasing capital efficiency. The directors are optimistic about the company's business and are hopeful of better performance with increased revenue in the years to come,” the filing said.
Meanwhile, the company's operational revenue rose 13% to Rs 81.3 crore and total expenses grew over five-fold to Rs 838.2 crore. Its advertising and marketing costs -- part of the company’s other expenses bracket -- more than doubled to Rs 86.4 crore. These expenses are primarily made for brand building and customer acquisitions that builds and enhances the market share of the company, the filing said.
The numbers are in contrast to a January media report that said that the cloud-based food services aggregator had slashed its marketing and customer acquisition expenses by two-thirds in the month, with expected cost-reduction initiatives to result in orders falling by 60%.
“The management is revamping the entire process to focus on becoming leaders in food manufacturing and processing. To achieve this, we have built state-of-the-art kitchen infrastructure and launched various brands in different segments like shakes, khichdi, biryani, rice bowls and desserts,” the filing said.
Pisces eServices’ board consists of three directors -- Ola co-founder and Foodpanda India CEO Pranay Jivrajka, ANI Technologies' group CFO Harish Abichandani and Matrix Partner's managing director Tarun Ramesh Davda.
In August last year, Pisces eServices acquired online ready-to-eat fresh food products seller Holachef. Since then, it has been in the news for its pivot from a food delivery-focussed business model to a cloud kitchen one.
In December 2017, the Indian ride-hailing company’s parent holding company ANI Technologies acquired Foodpanda's India business from Germany-based Delivery Hero Group and invested $200 million in it. The company exists in the rapidly-growing food-tech segment and faces a fierce competition from Naspers-backed Swiggy and Alibaba-backed Zomato.
India’s food-tech expansion is no longer a metro phenomenon, according to data from market research firm Redseer. Non-metro cities grew seven times faster quarter-on-quarter (January to March FY19) compared to metro cities.
“This was driven by a combination of smart promos, the growing selection of restaurants and increasing comfort with food-tech usage,” Redseer had said in June this year.