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Industrial Economist Administrator

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kandasamy@pppindia.com

Swiggy is acquiring Uber Eats in what can turn out to be the forerunner to interesting times in the food-ordering business.

Yeh Dil Maange More has become a widespread phenomenon. Now, India’s second largest food-tech startup, the Bengaluru-based Swiggy, wants more on its platter. So it is in the final phase to acquire Uber Eats, the food delivery division of the international ride-hailing platform, Uber. Swiggy raised 100 million dollars recently, which it will pump into making its largest acquisition yet.
The deal will give Swiggy the upper hand in facing Zomato and makes India’s food ordering galaxy a ‘dog-eat-dog world.’ The sale will be a share swap, and Uber will get a 10 percent share in Swiggy as purchase consideration. The valuation is 330 million dollars. Earlier Uber approached Zomato for an identical arrangement but the negotiations fell flat.

RECIPE SMELLS GOOD

Uber Eats India’s revenue growth was meagre in 2018. Currently, it is burning 25 million dollars every month to sustain operations, while Swiggy is blowing up 45 million dollars. Internationally Uber Eats has a net worth of 20 billion and generated 11 billion. revenue in 2018. The company is getting ready for an IPO to raise 120 billion by July 2019. To induce investors to pour money, the company has to curtail the loss in their Indian operations. In that direction permitting Swiggy to procure their Indian market business will save 300 million dollars a year.
Market pundits believe that the food delivery business in India will show revenue growth of 16.7 per cent CAGR over the next few years. The volume will be about 5.7 billion dollars by 2022. The marriage between Uber Eats India and Swiggy will enhance the theory of consolidation. This was witnessed earlier when Ola bowed to foodpanda. This action allowed two mega soldiers, Swiggy and Zomato, to fight the war. Together they hold 80 per cent of the online food delivery space in India. Now the competition will intensify and small players in the sector will get winning proposals. Thus, consolidation will be the new trend.

HUNGRY YOUNG MEN…

Within 48 months of operations, Swiggy became one of India’s fastest unicorn in June 2018. After that in December 2018, the valuation of the company zoomed to 330 million dollars. The management crafted an aggressive plan to invest the funds in distinguished offers by improving their technology while keeping matchless consumer satisfaction at heart. It also took bold steps to increase their tech strengths to solve customer grievances and acquired Artificial Intelligence (AI) startup Kint.io.
As a final point, there seems to be many hungry young men in the boardroom of Swiggy who wants a bigger bite. An ‘angry young man’ dominated the 1970s and 1980s. Hope the 21st-century hungry young men will prosper and always ask its customers ‘Hungry Kya?’