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Grofers targets profitability by FY21, IPO in 3 years

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Online supermarket major India is pursuing profitability by consolidation and focussing on doubling its sales to Rs 5,000 crore by FY’20. The company is also gearing up to hit the capital market with initial public offer (IPO) within the next three years.

Grofers targets profitability by FY21, IPO in 3 years

“We have closed FY’19 with Rs 2,500 crore sales. At present our monthly sales have touched Rs 225 crore, growing at 8.5 per cent month on month. We expect around Rs 5,000 crore sales in the current fiscal,” , Co-founder and CEO, Grofers told PTI.

According to a PTI report: The online player that was last valued at US$ 600 million has moved out of hyper-local delivery model 3 years ago. The decision not only aided its survival but also helped it to thrive year after year, Dhindsa indicated. The same strategy helped the company to inch closer to break even in major cities in the northern and eastern parts of the country.

Grofers, despite raising US$ 60 million recently, remained focussed on consolidating its presence in 12 cities (where it is already present) across the country to push profitability instead of aggressive geographical expansion.

“We are very close to break even in Delhi and we have managed to break even in Gurgaon and Noida regions. Kolkata numbers are also on the verge of turning positive,” Dhindsa told PTI.

He also said by end of the current financial year many more cities will turn profitable except for the ones in western and southern India, where Grofers is still in investment mode. “At the company level, we will start making profits by 2020- 21,” he was further quoted by PTI as saying.

The company will continue delivering value proposition through its in-house brand a common strategy for the online players to boost their margin.

“Already, our own brand sales such as Mother’s choice, Happy Home, Happy Day and Gfresh, have touched 40 percent of sales and in the next two years it will expand to 60 percent,” he told PTI.

About 86 percent of Grofers users use in-house brands, the company CEO said.

Dhindsa also said the company will pump in fresh resources in capacity building for sourcing and supply.

“In two years, we propose to expand the warehouse capacity from 26 million square feet to 40 million square feet to support supply chain,” he told PTI.

Speaking about east, Dhindsa said Kolkata is one of the fastest growing market for the company with a growth rate of 18 percent. He said expansion to Bhubaneswar and Guwahati during the third or fourth quarter of the year is also in the pipeline. However, a final call would be taken after a review, Dhindsa said.

Currently, Grofers only operates out of Kolkata in the eastern region. By leveraging existing warehouses in the NCR region, the company will spread its services to nearby cities such as Rohtak, Bhiwadi and Meerut. Grofers works closely with 4,000-5,000 small merchants who help the company fulfill its orders.