Grofers raises Rs 143 Cr from BCCL, receives Rs 321 Cr from parent entity

Grofers has a new investor onboard: media conglomerate Bennett Coleman & Company Limited.

According to regulatory filings with the RoC, Grofers has issued one share warrant worth Rs 142.75 crore and an equity share priced at Rs 13.05 lakhs to BCCL. The application money of Rs 14.26 crores has been received by Grofers and the rest will be payable on the allotment of securities against share warrants.

BCCL typically makes investments in start-ups through its ad-for-equity model. Entrackr couldn’t ascertain whether the deal also involves promotional and advertising campaigns across BCCL media properties.

Apart from this, Grofers has received Rs 321 crore from its parent entity in Singapore as the firm continues to ramp up its operations. 

Grocery is touted to be the prime revenue-driver for e-commerce in the long haul. Although the category is yet to see the participation of horizontal majors - Amazon and Flipkart, BigBasket and Grofers have been leading the segment for the past few years. 

While both companies used to compete fiercely in the earlier years with a similar business model, Grofers changed its track two-and-a-half years ago. Unlike BigBasket, the Softbank-backed firm has been focusing on the non-premium customer with its private-label approach. It also steers clear from express deliveries and fresh product offerings. 

The model seems to have resonated well with existing investors - Softbank Vision Fund, Tiger Global and Sequoia Capital. As a result, they invested around $270 million in the Gurugram-based firm earlier this year.

Looks like part of this investment has been pumped into the India entity. According to another filing, Grofers received 321.35 crore by issuing 2674 equity shares to its parent entity based in Singapore. These shares were priced at Rs12.01 lakh per share. 

The new infusion is likely to be used towards expanding operations and launching more brands across FMCG and other staples. Apart from expanding its online presence, Grofers has also been pushing its in-house brands through the offline channel, in an attempt to become a new-age FMCG firm. The company is partnering retailers for this. 

So far, it has powered about 125 small and medium retailers across the NCR region.

The move is largely steered to find a fresh market beyond its online presence. Exploring the offline market appears to be a meaningful strategy for Grofers that is looking to establish itself as a mass brand in the grocery and FMCG segment. The company is also pushing for aligned categories such as kitchen utensils and cosmetics. 

Moreover, one of the ways for grocery players to make money would be by expanding their in-house brands which command a much higher margin when compared to simply selling other brands on their platform. BigBasket, too, pushes its private brands on the online grocery platform. 

Meanwhile, both Flipkart and Amazon are trying their hands at the grocery, albeit at a much slower pace. While Amazon is ramping up its grocery play through acquiring stakes in brick and mortar businesses - Future Group and More, Flipkart has the support of its parent Walmart to possibly have a strong grocery arm. Flipkart recently forayed into food retail through its new entity Flipkart Farmermart. It has authorised to invest $258 million in the new entity.