Foodtech major Zomato on Saturday (September 16) said it will wind up its Slovakian subsidiary and has initiated the process of liquidation.
The liquidation process of the Slovakian arm commenced on September 14 and will likely be completed within 9-12 months subject to requisite approvals. Zomato also said that the dissolution of the subsidiary will have no impact on the turnover of the consolidated entity.
“… we wish to submit that Zomato Slovakia, (a) step down subsidiary of Zomato Limited situated in (the) Slovak Republic, has initiated the process of liquidation on September 14, 2023… It may be further noted that… the dissolution of Zomato Slovakia will not affect the turnover/revenue of the company,” said Zomato in a regulatory filing with the BSE.
It must be noted that the foodtech major, in its red herring prospectus (RHP) filed with SEBI in July 2021, said that Zomato Slovakia did not have any active business operations.
In its regulatory filing, Zomato pegged the Slovakian arm’s net worth at around INR 2.2 Lakh.
The move could likely be part of Zomato’s renewed focus on India operations and profitability. By dissolving its Slovakian subsidiary, the company aims to optimise operations and offset regulatory and compliance costs incurred in the country despite no active business operations.
Zomato first forayed into Slovakia seven years ago in 2014 after acquiring online restaurant discovery guide Obedovat.sk for a sum of $1 Mn. It was then the company’s second overseas acquisition.
At the time, the foodtech major had termed the acquisition a part of its strategy of inorganic expansion overseas. Since then, much has unfolded at Zomato and the company has shut at least six overseas subsidiaries, either wholly-owned or step down, since its public listing.
The latest development comes days after Zomato shut its Czech arm Lunchtime. Since late 2021, Zomato has dissolved subsidiaries in countries such as the US, UK, Indonesia, New Zealand, Canada, Australia, Jordan and Qatar. However, it continues to offer its restaurant discovery and dining-out services in the UAE.
Not just globally, the company has also been pulling out of Indian cities that do not offer an attractive financial proposition for the company. At the outset of 2023, Zomato said it ceased operations in 225 cities in the country due to poor performance.
Meanwhile, the company has been aggressively focussing on profitability. It reported its first-ever profitable quarter in the first quarter of the financial year 2023-24 (FY24) with a consolidated profit after tax (PAT) of INR 2 Cr. In contrast, the company recorded a consolidated loss of INR 186 Cr during the corresponding quarter last fiscal.
It has also introduced a platform fee ranging from INR 2 to INR 3 per order to shore up its top line. All these have resulted in the company’s shares bouncing back strongly this year. On a year-to-date basis, shares of Zomato have surged 73.61%.
Shares of Zomato closed 3.61% higher at INR 103.04 on the BSE on Friday (September 15).
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