Online food delivery aggregator Zomato is moving to a multiple chief-executives structure for its businesses that will be housed under a larger organization called Eternal.
"We are transitioning from a company where I was the CEO to a place where we will have multiple CEOs running each of our businesses, all acting as peers to each other and working as a team with each other towards building a single large and seamless organization," Deepinder Goyal, MD & CEO of Zomato wrote on the company’s Slack channel last week after the shareholders’ approval for the Blinkit acquisition.
"Starting today, we are going to call this larger organization Eternal," he said, adding it will remain an internal name for now.
Zomato did not respond to email queries. Stock of the aggregator were trading with cuts of nearly 3% in midday trade, around Rs 45.50 apiece.
Goyal explained that the company is at a stage where it is maturing from running, more or less, a single business to running multiple large companies. He further said that Eternal will have multiple companies.
Zomato has been actively investing in startups. Just last year, besides investing in Blinkit (erstwhile Grofers), it also invested in business-to-business (B2B) logistics technology player Shiprocket, hyperlocal discovery platform magicpin and fitness major Curefit.
Goyal, in a company blog in November last year, also said that Zomato is setting aside a war chest of $1 billion to invest in multiple startups over the next two years. A large chunk of it was likely to go into the quick commerce space, he had said. It followed it up with the acquisition of Blinkit this year for $569 million.
In the past few weeks, Zomato's shares have come under significant sell-off pressure as the one-year lock-in period for internal investors holding around 613 crore shares or 78% of Zomato’s shares ended on Saturday 23 July. As part of the sell-off in Zomato, its pre-IPO investor Moore Strategic Ventures sold its entire stake, marking a loss on its over one year-old bet.
The food aggregator’s share price has corrected nearly 70% from its peak hit shortly after a blockbuster listing last year.
However, stocks of not just Zomato but other new age companies that listed last year have also taken a beating amid concerns around their valuations. Zomato's acquisition announcement of Blinkit has also raised worries about its path to profitability.
Last week, global brokerage firm Jefferies said that Zomato makes for a great case for long-term investors and set a 12-month target price of its shares at Rs 100 apiece. Jefferies also said that Zomato management has accelerated its journey towards better unit economics and is now eyeing a break-even in the food delivery business in the foreseeable future.
Zomato reported a net loss of Rs 359.7 crore for the quarter-ended March versus a loss of Rs 138.1 crore during the same period in the preceding year. The net loss widened despite a rise in other income to Rs 138.2 cr versus Rs 58.4 crore.
Zomato’s revenue, however, saw a 75% rise in Q4FY22, at Rs 1,211.8 crore vs Rs 692.4 crore year-on-year. The company will report its first quarter (April-June) earnings on 1 August.