Published: Wed, December 20, 2017
Finance | By Cynthia Curry

Ola acquires Foodpanda: Marks its entry back into the food business

Ola acquires Foodpanda: Marks its entry back into the food business

Apart from the acquisition, Ola has also announced that it will further invest around ₹1,281 crore ($200 million) in the Foodpanda India business. Likewise, Ola has stated that Foodpanda India will benefit from its scale and efficiencies as a platform and it will continue to collaborate with Delivery Hero on building the online food delivery ecosystem in the country. The deal includes transfer of the Berlin-based company's India business to Ola in exchange for Ola stock, a press statement said. Pranay Jivrajka, founding partner at Ola has been appointed as the interim CEO of Foodpanda India.

Ola, the rival of Uber in India has acquired food-delivery startup Foodpanda India Pvt. "Our commitment to invest $200mn in Foodpanda India will help the business be focused on growth by creating value for customers and partners", Ola CEO Bhavish Aggarwal said in the statement.

In 2016, Delivery Hero took control of Foodpanda GmbH but that deal had little trickle-down effect in India operations.

According to Jefferies, Zomato is now processing 2.5 million orders per month in India, while Swiggy, the market leader, is clocking 3 million to 4 million orders a month. However, with no interest from buyers despite reports of talks with Zomato and Swiggy, the company was left with no option but to rationalise business operations. In the same year Foodpanda itself, back then owned by Rocket Internet, was acquired by its German rival Delivery Hero.

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Foodpanda has over 15,000 restaurants across 100 Indian cities on its platform.

On a more sober note, Ola has much to learn from its disastrous previous foray into the food delivery business-Ola Cafe shut down in 2016 after less than a year of being launched as a pilot project in a few tier-one cities.

Foodpanda's global operations were sold to Delivery Hero by investor Rocket Internet in December past year, a fallout of the bloodbath that the food tech space witnessed in India. Also, Saurabh Kochhar, who was the CEO of Foodpanda India until recently, has chose to depart to pursue other opportunities. For many, it makes ideal sense for Ola to acquire Foodpanda which has the market expertise and established user base than trying its hand and getting burned again with a similar attempt as Ola Cafe. For anyone trying to comprehend this shift first has to understand two things.The cut-throat competition and the huge potential of food delivery business, and Ola's constant effort to diversify its business.

The efforts bore fruit as last month, Foodpanda's India unit said its revenue for the year through March 2017 jumped 64% on year to Rs 62.16 crore while losses narrowed to Rs 44.81 crore from Rs 142.64 crore.

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