Food tech giant Zomato, after dissolving several global subsidiaries in 2023, continues its restructuring efforts into 2024. The company announced on Thursday (January 4) that its step-down subsidiary in Vietnam, Zomato Vietnam Company Limited (ZVCL), has initiated the process of liquidation.
In an exchange filing, Zomato stated that ZVCL’s contribution to its total turnover was zero and that its dissolution would not affect the company’s revenue. ZVCL’s net worth was reported at INR 36 Lakh.
This announcement follows the initiation of the liquidation process for Zomato’s Polish step-down subsidiary, Gastronauci SP. Z.O.O., whose contribution to the company’s total turnover was also zero.
Despite these restructuring efforts, shares of Zomato have continued to sustain an uptrend, with the Zomato stock ending the day’s trade almost 2% up at INR 129.95 on the BSE.
In 2023, Zomato focused on achieving profitability, which included exiting from multiple countries such as Indonesia, Jordan, Czech Republic, and Slovakia. The company achieved profitability in the first quarter of FY24 and reported increasing profits in the subsequent quarter. Additionally, Zomato has increased its newly introduced platform fee to INR 4 per order from an initial range of INR 2-3, as part of its monetization strategies.
However, Zomato is currently facing fresh tax trouble, with tax authorities issuing a notice of INR 4.2 Cr for alleged short payment of goods and services tax (GST). This comes after a previous notice of INR 401.7 Cr from the Directorate General of GST Intelligence, Pune Zonal Unit, over unpaid tax on delivery charges.
In response to these challenges, JM Financial stated in a recent research report that Zomato could pass the GST burden directly to end customers if the final order goes against the company. Despite these issues, Zomato maintains a cash balance of INR 11,800 Cr, which is seen as sufficient to cover any adverse orders towards historical dues.
Zomato shares had gained over 100% last year, leading many analysts to view it as a “multi-bagger stock,” signifying high potential for significant returns.
