Ola's parent company to park Rs 400 crore to boost Foodpanda India logistics & tech

NEW DELHI: Online food delivery service Foodpanda India will be shelling out Rs 400 crore over the next 12 months to further build its logistics and delivery operations along with its technology stacks, as the once-market leader looks to take on its cash-rich rivals and regain lost ground.

Foodpanda India was acquired by ANI Technologies, which also owns and operates ride-hailing app Ola, from Delivery Hero Group in a stock deal pegged at $40 million in December last year.

It competes with the likes of Alibaba Group-backed Zomato, Naspers-backed Swiggy and cab-hailing major Uber’s on-demand food delivery service Uber Eats. The $60-million spend will come from the $200 million ANI Technologies had committed to the company at the time of the acquisition. The acquisition of Foodpanda India is seen as a move by Ola to broaden its range of services, including the food-delivery segment, after Ola Cafe failed to take off in 2015.

Speaking to ET, Pranay Jivrajka, chief executive at Foodpanda India, said the company, which has about 17,000 restaurants listed on its platform, will be working on creating and further building a stronger backend technology that will allow the company and its restaurant partners to work more seamlessly.

“Creating a robust technology stack is a fundamental need, which will also play a massive role in building a strong delivery ecosystem,” Jivrajka said. “We are also working on the consumer-facing side of the business to provide a more fulfilling user experience.” According to Jivrajka, who prior to helming Foodpanda India was a founding partner at Ola, the company, which has about 4,500-5,000 riders currently, will ramp that up to about 25,000 over the course of the next 12-15 months.

Foodpanda India, which claims to be in about 130 towns and cities across the country, will be doubling down on about 10 cities across Asia’s third-largest economy, and which constitute about more than 50% of the overall orders received by the food delivery companies. “We are also ramping up our last mile connect by hiring 25,000 delivery riders. This is in line with our go-to-market strategy to make a difference in the food ordering experience of our restaurant partners, customers and riders,” Jivrajka said.

The announcement comes at a time when the country’s online food delivery segment continues to be dominated by just a handful of names that have, however, gone on the raise significant amounts of risk capital.

Last week, South African media giant Naspers led an investment of $100 million in food delivery firm Swiggy, along with China's online-to-offline service platform Meituan-Dianping, which is backed by Tencent.

Prior to that, market leader and online restaurant discovery and food delivery firm Zomato had raised $200 million from Ant Financial, the payments affiliate of Chinese e-commerce giant Alibaba.

The Indian food delivery market grew 140% to $700-750 million in 2017, up from about $300 million in 2016, according to Redseer Consulting. Continuing on this momentum, RedSeer estimates the sector is on course to reach a gross merchandise volume of $1.5 billion by 2018-end and $2.5-3.5 billion by 2021.