Indian food-delivery firm Zomato Ltd’s board has approved to grant a loan of $150 million to Blinkit, an online shopping platform formerly known as Grofers.
Blinkit rebranded itself late last year as its Chief Executive Officer promised to speed up deliveries of everything from groceries to electronics in a burgeoning market dominated by Walmart’s Flipkart and Amazon’s local unit.
As part of its $400 million investment plan over the next two years in the quick commerce services segment, Zomato, in a disclosure filing with the National Stock Exchange in compliance with the Securities and Exchange Board of India regulations, said the company’s board of directors at a meeting on March 15, 2022, had granted a loan of $150 million to Blinkit, with the terms of the loan to be decided at a future date, and approved the acquisition of a 16.66 per cent stake in Mukunda Foods for an aggregate cash purchase of $5 million.
“This loan will support the capital requirements of GIPL (Grofers India Private Limited, or Blinkit) in the near term and is in line with our stated intent of investing up to $400 million cash in quick commerce in India over the next two years,” the company said.
With the benefits of robots to improve productivity, many food businesses are entering this space.
Mukunda is a food robotics company that helps automate food preparation at restaurants by designing and manufacturing intelligent robotic equipment.
Zomato said, “our investment will help Mukunda Foods scale faster, help reduce restaurant food prices, expand margins, and enhance customer delight.”
A separate report from TechCrunch quoted by Reuters showed Zomato had reached an all-stock merger with Blinkit that values the instant-delivery service between $700 million and $750 million, citing a source familiar with the matter.
While Zomato and Blinkit did not immediately respond to requests for comment, said Reuters.
In August, the food-delivery company acquired a more than 9 per cent stake in SoftBank-backed Blinkit for 5.18 billion rupees ($67.77 million).
Blinkit operates in more than 20 locations across India and offers the convenience of delivery in 10 minutes, far lower than the hours or days most competitors take.