Business matters: Swiggy bleeds; Zomato loses yet another executive

Swiggy losses now exceed ₹3,600 crore

Impact: Due to its increasing losses every quarter, the food delivery app is anticipated to lay off between 3 and 5 per cent of its whole workforce, or roughly 250 workers. Swiggy’s Supr Everyday, which delivered groceries and daily necessities to major cities, was recently discontinued. In its place, a luxury grocery service called Handpicked was launched. 

However, Jefferies, a financial services firm, claims that Swiggy is losing market share to Zomato and thereby losing more money. Swiggy may decide to charge restaurants additional commissions in an effort to reduce losses, but businesses may object because they already pay higher commissions on top of other fees. As a result, the cost of delivery to clients likewise rises with time.

In series of resignations at Zomato, co-founder and CTO Gunjan Patidar quits

Impact: After Mohit Gupta (co-founder), Rahul Ganjoo (Head of New Initiatives), and Siddharth Jhawar left the company in the past two months, Patidar is the fourth co-founder and fourth top-level exit since 2018. 

The change occurs as publicly listed Zomato’s meal delivery service has reported breakeven and is actually performing better than Swiggy. In Q2 FY23, Zomato’s food delivery gross order value (GOV) increased 3.1% QoQ (compared to the prior quarter) and 22.6% YoY (compared to the same time last year). 

Following the company’s news of Patidar’s resignation, stocks plummeted 2%, although analysts claim that Zomato’s current operations won’t be affected.

Travel tech firm Oyo reports seeing over 4.5 lakh bookings on New Year’s Eve, which is a record

Impact: Ritesh Agarwal, the firm’s founder and group CEO, said the company has had its biggest reservations per hotel per day for India in the previous five years, but he deftly pushed under the rug the issues that small hotel owners have been having as a result of unpaid debts to them. Hotel owners across the country have filed numerous complaints against the Oyo administration, and some have even banned visitors who check in using the Oyo app.

Chairman of Economic Advisory Council says 6.5% growth in FY24 is conceivable

Impact: Claims of a 6.5 per cent growth in FY24 should be viewed in that context since numerous analysts believe that even a 6 per cent growth is improbable. While the Center’s finances appear to be somewhat under control despite the significant capital push, driven by robust increase in tax revenue, non-tax revenue has decreased as was to be expected, according to a research report by Emkay Global Financial Services. 

This is not the case for the states, where strong income growth has been met with a greater emphasis on revenue expenditure, with capex actually down 3 per cent YoY and state borrowings being lower as a result (down 27 per cent fiscal year to date, of FYTD). 

But the growing current account deficit may give rise to some concerns (importing more goods and services than it is exporting). In Q2 of FY2023, it reached a record high of $36.4 billion. In other words, the large merchandise trade imbalance (imports above exports) of $83.5 billion has caused the CAD (current account deficit) to widen to an all-time high of 4.4 per cent of GDP. 

Usually, the biggest part of a current account deficit is the trade deficit. ICRA report also noted that the Q1 FY23 CAD was substantially revised downward by $5.7 billion as a result of a decrease in the quarter’s merchandise import figures.

Unemployment rate in India increases to 8.3% in December, up from 8% in November, a 16-month high

Impact: According to data from the Centre for Monitoring Indian Economy (CMIE), employment creation is declining even while the country’s economy is contracting. Any increase greater than 8 per cent will be viewed at the general elections in 2024 as a significant failure of the current government at the centre, thus the next budget should attempt to address the issue.