An employee arranges vegetables at a supermarket (Photographer: Dhiraj Singh/Bloomberg)

Grofers Pursues Profit, Targets IPO In 3 Years

Online supermarket major Grofers India is pursuing profitability by consolidation and focusing on doubling its sales to Rs 5,000 crore in 2019-20.

The company is also gearing up to hit the capital market with an initial public offer within the next three years.

“We have closed FY19 with Rs 2,500 crore sales. At present our monthly sales have touched Rs 225 crore, growing at 8.5 percent month-on-month. We expect around Rs 5,000 crore sales in the current fiscal,” Grofers co-founder and CEO Albinder Dhindsa told PTI.

The online player that was last valued at $600 million has moved out of hyper-local delivery model 3 years ago. The decision not only aided its survival but also helped it to thrive year after year, Dhindsa indicated.

The same strategy helped the company to inch closer to break-even in major cities in the northern and eastern parts of the country.

Grofers, despite raising $60 million recently, remained focussed on consolidating its presence in 12 cities, where it is already present, to push profitability instead of aggressive geographical expansion.

“We are very close to break-even in Delhi and we have managed to break-even in Gurgaon and Noida regions. Kolkata numbers are also on the verge of turning positive,” Dhindsa said.

He also said by end of the current financial year many more cities will turn profitable except for the ones in western and southern India, where Grofers is still in investment mode.

“At the company level, we will start making profits by 2020-21,” he said.

The company will continue delivering value proposition through its in-house brand, a common strategy for the online players to boost their margin.

“Already, our own brand sales such as Mother's Choice, Happy Home, Happy Day and Gfresh, have touched 40 percent of sales and in the next two years it will expand to 60 percent,” the co-founder of the startup said.

About 86 percent of Grofers users use in-house brands, he added.

Dhindsa also said the company will pump in fresh resources in capacity building for sourcing and supply.

“In two years, we propose to expand the warehouse capacity from 26 million square feet to 40 million square feet to support supply chain,” he said. By leveraging existing warehouses in the NCR region, the company will spread its services to nearby cities such as Rohtak, Bhiwadi and Meerut.

Grofers works closely with 4,000-5,000 small merchants who help the company fulfill its orders.