?BigBasket eyes to raise $150 million to expand warehousing and cold chain facilities

The SuperMarket Grocery Supplies Pvt. Ltd, which runs BigBasket, the online food and grocery store, posted a 34.5% increase in revenue in the fiscal year 2017-18. The operational revenue reached Rs. 1,606 crore in FY 2017-18; it was Rs 1,197 crore in the previous financial year.

As per the reports, the operating losses are almost consistent as compared to the previous year. The losses narrowed by 53% (Rs. 310 crore) for FY18 while it remained Rs. 312 crore for FY17.

BigBasket’s Innovative Retail saw an increase in revenue by 29% to Rs. 1,410 crore.

The Indian online grocery market, as per the industry estimates, is expected to grow at a CAGR of 55% during 2016–2021.

Bengaluru-based BigBasket is backed by the Alibaba Group Holding, and as per the reports, is in talks to raise over $200 million. Last year, the online food and grocery store raised $300 million in a Series E round of funding. On the other hand, the Gurugram-based Grofers, BigBasket’s competitor is also in talks to raise the funds led by Japanese firm SoftBank Group in order to stay abreast with the second phase of the growth.

BigBasket’s business model is based on direct sourcing from the farmers. It is working with 1,800 farmers, currently, and aims to expand and work with 3,000 farmers in the coming years. At present, BigBasket, the online food and grocery store is among the top e-tailers and operates in 30 cities across India.

The online food and grocery seller has expanded its operations to the HoReCa (hotels, restaurants, and caterers) industry, thus, strengthening its business-to-business operations. It has also partnered with local kirana stores to enable smooth functioning in the operations.

bigbasket, India's largest online supermarket, has announced the acquisition of three new ventures and with this, the company makes an entry into 2 new industry segments of micro-delivery and physical/omnichannel commerce.

Of these, the retail major has 100% stake in two ventures namely Bengaluru-based Morning Cart and Pune-based RainCan (Bloomskart Retail Private Limited). In the third venture called Savis Retail which operates cloud-connected, un-manned, smart vending machines under the name kwik24, bigbasket has a controlling stake.

Morning Cart & RainCan are offering Milk subscriptions, however, this acquisition brings a huge value-add to the customers where bigbasket will offer subscription-based services. bigbasket has already initiated a soft launch of the new subscription service, named bbdaily, in Bangalore & Pune and is soon to launch in 8 other metro cities.

With Kwik24, bigbasket has installed 100 smart vending machines across Bengaluru and plans to further expand to other cities very soon. The vending machines are installed as part of the bb Instant service.

Hari Menon, CEO and Co-Founder, bigbasket, said, "The micro delivery startup acquisition really helps bigbasket in accelerating the need to bring fresh subscription services to our customers daily. The Kwik24 acquisition gives us the ability to be closer to the customer by way of the bb instant smart vending kiosks."

Gulabs, the makers of tasty and delectable hand-crafted Indian snacks has partnered with BigBasket, the leading online food and grocery store.

Under this partnership, customers in Chennai, Bangalore, Mumbai, Pune and Hyderabad will be able to buy Gulabs products through the BigBasket.com website from the comforts of their home. The much sought after items of Gulabs such as Khakhras, Shartbats, Masalas and Pickles will be available at the website from now on.

Commenting on the partnership, Ruchika Gupta, VP – Sales and Marketing of Gulabs said, “BigBasket is a renowned player for online food and grocery shopping and the collaboration between Gulabs and BigBasket will let the consumers across different cities access our products in a jiffy. BigBasket’s strong foothold in these cities and our handcrafted beverages and snacks is a right combination to make this partnership a success.”

Gulabs Khakhras are available in Ajwain, Besan, Methi, Moongadi and Plain flavours. Shartbats come in Jeera, Lemon Ginger, Lemon, Paan, Pudina, Rose, Saunf and Thandai. In Masalas, there is a wide variety that includes Garam Masala, Malagapodi, Rasam masala, Rice podi, Sambar masala, Tea masala powder and Ukali. Tangy Lemon (oil free) flavour is available in Pickles.

US-headquartered e-commerce firm, Amazon.com Inc. is in preliminary talks to acquire hyperlocal delivery service provider, BigBasket, as the company steps up efforts to gain ground in the fast-growing market.

The discussions are at an early stage and may not lead to a sale, sources revealed. BigBasket is India’s largest online grocery firm and operates in about 25 cities across the country.

A BigBasket spokesperson said that it is untrue that Amazon is in talks to buy the firm.

Jeff Bezos, CEO, Amazon, has vowed to spend $5 billion in India in coming years as he competes against local rivals. Amazon’s success in the country has pushed the two largest domestic e-commerce players, Flipkart Ltd. and Snapdeal, into a preliminary agreement to combine.

According to people aware of the matter, Amazon and BigBasket have not yet agreed to any specific terms. BigBasket has also had discussions with private equity firms. The startup has been boosting revenue quickly and has reached break-even in two cities.

Amazon has been expanding in online food and grocery sales as it seeks to increase its product offerings. This year, it opened drive-in grocery locations in Seattle, its home town, as part of a renewed effort in the business.

Last year, BigBasket raised $150 million in a funding round led by Dubai’s Abraaj Group, and its backers also include Bessemer Venture Partners and Helion Venture Partners.

State-run, Bengal Chemicals & Pharmaceuticals Ltd (BCPL) has announced its collaboration with hyper local delivery startup, BigBasket to sell its home products for the Kolkata market. 

BPCL products are available on the website and mobile app of the online store from Saturday. 

P M Chandraiah, Managing Director and Director (Finance), BCPL, said, "We are initiating a new front and going online. We have joined hands with Big Basket for Kolkata market.”

Chandraiah stated that BPCL products will delivered by BigBasket at the doorstep of the customer within 90 minutes.

The company reported a net profit of Rs 4 crore in 2016-17 for the first time in six decades.  

Food processing minister Harsimrat Kaur Badal has made a fresh pitch for relaxing rules for foreign direct investment (FDI) in the food retail business, suggesting that the current norms have resulted in lower-than anticipated interest from companies.

The government had allowed 100% FDI in locally-produced and manufactured food products in a bid to encourage domestic industry and farmers, besides cutting down on wastage.

The policy was announced in February 2016, but companies such as Amazon, Metro Cash & Carry, Grofers and BigBasket that had sought government nod are yet to get a go-ahead. Major retailers such as Walmart, which had studied the model, have, however, stayed away so far as they want to enter when non-food items are also permitted.

The rules will also restrict the ability of a consumer to buy an imported food item from a store that has FDI.

Badal said, "Internationally, it's food plus other related items. Food has very small margins and to open a large outlet requires a lot of investment... That's why I wrote to the PM suggesting that infrastructure is needed at farm gate level for better price realisation and reduce wastage. It can be a sweetener for growth in capital-intensive infrastructure for seasonal produce. So, whatever a retailer invests in the back-end at the farm gate level, a small percentage of that, may be 20%, can be used for stocking other related home products. These goods can also be manufactured in India and will help create jobs."

The minister said "Over time, not as many people as we thought would enter retail have come. They are hoping that certain amount of flexibility is given."

Badal, however, repeatedly said that there had been a 40% jump in FDI in the food processing sector from around $500 million last year to $785 million so far in the current year and added that the steps taken by her ministry along with an easier policy regime for food retail could result in inflows of around $10 billion in the two segments over the remaining 24 months of the government's current term.

The SAD nominee in the Modi government also suggested a new tax policy for beverages that contain 5% juice.

PM's call to soft drink makers to have at least 5% juice content in some aerated drinks has prompted global giants such as PepsiCo and Coke to develop new formulations, for which standards have also been put in place. These companies are now awaiting clarity on taxes before the products hit shop shelves.

She said, "After the PM said this will impact farmers positively, new formulations have come up. Normally, aerated drinks have around 2% juice content and juices have over 10%. Now, industry says that the tax cannot be the same as aerated drinks but obviously it cannot be at the same level as juices. So, a new tax structure has to be made to promote and encourage it."

Under GST, juices are expected to attract around 12% duty, while aerated drinks will face access beyond 28%.

The minister also said that she has made a pitch to Finance Minister Arun Jaitley to ensure that food products are kept in the lowest tax bracket of 5% to ensure that consumers are not burdened with higher taxes in the GST regime.

Grocery delivery startup BigBasket has partnered with retail tech company SnapBizz as it looks to push its private labels into more kirana stores in the country.

Abhinay Choudhari, Co-founder, BigBasket, said, while B2B constitutes 17-18% of the company's total business, it is expected to grow to 25% in the next two to three years.

Choudhari added, "We are in the process of scaling up our B2B business and have plans to achieve Rs 1,000 crore exit rate by the end of FY18. Currently, kirana stores form about 70% of our B2B business, while the rest is revenue from hotels, restaurants and caterers."

The two companies have created a supply chain platform that will enable kirana stores to automatically generate orders using predictive analytics of SnapBizz's technology, which will then be fulfilled by BigBasket.

Chirantan Bhabhra, Director of sales, SnapBizz, said, "Kirana store owners often have to spare a whole day to go to a wholesale market and buy products, and often there is also a lot of wastage. This new platform will help create a level-playing field with the modern retail store."

Choudhari said BigBasket's supplies to kirana stores are priced at wholesale prices irrespective of the size of the order.

BigBasket's focus on B2B is evident from the fact that it recently set up a dedicated distribution centre for servings businesses in Bengaluru and plans to set up more in six cities this year.

India's online grocery delivery service BigBasket and smaller rival Grofers India have begun talks on a possible merger, a source has revealed.

The report said, If the merger goes through, SoftBank Group, which is an existing investor in Grofers', will participate in a $60 million to $100 million funding round in the merged company.

The report also said, the talks, which are in early stages, may value BigBasket at about $700 million to $800 million, while Grofers could be valued at $150 to $200 million.

Online grocery sales are a fast growing segment in India's e-commerce industry as more consumers log in to internet for their purchases.

The apex food regulator in the country, Food Safety and Standards Authority of India (FSSAI), is aiming to improve the quality of food sold through online channels, after consumers complained about expired food products being sold on ecommerce sites.

In doing so, the regulator has adopted a two-pronged approach -e-commerce entities selling packaged food will have to register with the regulator -and all e-commerce companies selling cooked food will have to take licenses.

A Foodpanda spokesperson said, "We welcome the change by FSSAI and have ourselves been diligently working on the restaurant hygiene through our Food Doctor Programme. While we constantly work towards improving and maintaining standards, we have already set the process in motion to update the licence numbers and are already halfway."

Subsequently, FSSAI announced imported food items with less than 60% of shelf life will not be allowed to enter Indian market. Pawan Agarwal, CEO, FSSAI, said, "We have held talks with Amazon and Snapdeal. We have also asked them to come up with their own solutions."

A Snapdeal spokesperson said, "We appreciate FSSAI for their progressive outlook in conducting a comprehensive stakeholder consultation on the guidelines for all ecommerce food business operators. With a view to enable compliance with food safety and quality standards, we shall take steps to ensure adherence to the guidelines and also facilitate required communication to the sellers and the consumers."

Albinder Dhindsa, Co-founder of Grofers, said, "Yes, we will be getting registered."

The FSSAI guidelines also said food products offered for sale by any ecommerce entity "shall be liable to sampling at any point in supply chain."

Rashmi Daga, founder of online kitchen FreshMenu, which runs kitchens in many cities across the country, said her company has all necessary licenses in place.

Rashmi said, "The new guidelines will have implications for companies that list restaurants on their sites and deliver food."

Hari Menon, Co-founder and chief executive of Bigbasket said, "We already have FSSAI licenses for all our warehouses, for our last mile delivery unit, the license numbers are prominently displayed on all our private label products. We also ensure that we sell food products of companies only if they have an FSSAI license. It is a mandatory requirement for listing products on BigBasket."