Zomato, the Gurugram-based foodtech giant, has officially dissolved its subsidiary in Slovakia as of July 12, 2024. This move completes the liquidation proceedings that began 10 months ago, according to a stock exchange filing released on Friday. The decision to liquidate the subsidiary aligns with Zomato’s strategy to concentrate on its core market in India and streamline operations.
Liquidation of Non-Operational Subsidiary
In September of the previous year, Zomato announced the initiation of liquidation proceedings for its Slovak subsidiary. The subsidiary, with a net worth of Rs 2.2 lakh, was deemed non-operational and contributed less than 0.0001% to Zomato’s overall net worth. This minimal impact on the company’s finances meant that the liquidation would not materially affect its turnover or revenue. The dissolution of the Slovakian subsidiary is part of a broader strategy by Zomato to withdraw from smaller, less profitable markets and refocus its resources on India, where it sees greater growth potential.
Strategic Withdrawal from Smaller Markets
In 2016, Zomato revealed plans to scale back its operations in nine countries, including the US, the UK, Brazil, Italy, and Slovakia. The company later clarified that Italy and Slovakia were not focus markets due to the lack of local ground teams. This strategic withdrawal is part of Zomato’s ongoing effort to streamline its operations and focus on markets where it has a stronger presence and potential for growth.
Last year, Zomato also liquidated its subsidiaries in Portugal and New Zealand. These moves underscore the company’s commitment to concentrating its efforts on more significant markets and optimizing its operational efficiency.
Employee Stock Options and Financial Performance
Meanwhile, Zomato has been making strides in other areas. Earlier this week, the company approved the allocation of 40 million Employee Stock Options (ESOPs) under its 2014 and 2021 plans, totaling Rs 892.19 crore in Zomato stocks. In its quarterly earnings report, the foodtech startup announced plans to establish an ESOP pool consisting of 18.26 crore employee stock options, representing approximately 2% of its outstanding share capital on a fully diluted basis. This move is part of Zomato’s efforts to retain and motivate its employees by giving them a stake in the company’s future success.
Zomato has demonstrated robust financial performance in the financial year 2023-24. The company’s standalone revenue from operations surged 71% year-on-year to Rs 12,114 crore, driven by strong performances in both food delivery and quick commerce. This impressive growth has helped Zomato report a net profit of Rs 351 crore in FY24.
One of the significant contributors to Zomato’s financial success has been its quick commerce division. The division achieved positive adjusted EBITDA in March, highlighting its profitability and operational efficiency. Zomato has been aggressively expanding its quick commerce services, which include fast deliveries of groceries and other essentials. The company plans to scale up to 1,000 stores by March 2025, further enhancing its market presence and service capabilities.
The dissolution of Zomato’s Slovak subsidiary is a strategic move that aligns with the company’s broader goal of focusing on its core market in India. By withdrawing from smaller, less profitable markets, Zomato can concentrate its resources on areas with higher growth potential. The company’s strong financial performance and strategic expansion in quick commerce highlight its commitment to growth and operational efficiency. Additionally, the approval of significant ESOP allocations underscores Zomato’s dedication to retaining and motivating its workforce, positioning the company for continued success in the competitive foodtech industry.
