Zomato Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This is a detailed analysis of the provided Zomato Limited Annual Report for FY24 (ending March 31, 2024). The report showcases significant growth and a transition to profitability, but also highlights key risks and ongoing ESG commitments.

I. Financial Highlights:

The report presents both GAAP and non-GAAP (Adjusted) financial metrics. Key takeaways:

• Strong Revenue Growth: Consolidated Adjusted Revenue surged by 56% YoY to INR 13,545 crore. This growth was driven across all business segments.
• Profitability Achieved: Consolidated business turned profitable for the first time. Consolidated Adjusted EBITDA reached INR 372 crore (compared to a loss of INR 783 crore in FY23). Consolidated PAT was INR 351 crore (vs. a loss of INR 971 crore in FY23).
• B2C Business Dominates: The B2C business (Food Delivery, Quick Commerce, Going-Out) generated a combined GOV (Gross Order Value) of INR 47,918 crore, showing a 48% YoY growth. Adjusted Revenue from these segments was INR 10,351 crore.
• Food Delivery: GOV grew by 23% YoY to INR 32,224 crore, while Adjusted Revenue grew by 27% YoY to INR 7,792 crore. This segment achieved positive Adjusted EBITDA (INR 912 crore) for the full year.
• Quick Commerce (Blinkit): GOV grew significantly by 93% YoY to INR 12,469 crore, indicating substantial growth in this segment. Adjusted Revenue increased by 116% YoY to INR 2,301 crore and reached Adjusted EBITDA breakeven in March 2024.
• Going-Out: This segment, covering dining-out and ticketing, experienced explosive growth, with GOV surging 136% YoY to INR 3,225 crore. Adjusted Revenue grew 51% to INR 258 crore.
• B2B Supplies (Hyperpure): Revenue grew by 111% YoY to INR 3,172 crore, driven by both core restaurant supplies and the expansion into quick commerce. Adjusted EBITDA margin improved considerably to -4%.
• Cash Position: Consolidated cash balance increased to INR 12,241 crore as of March 24, 2024, indicating a strong financial position.

II. Business Segments:

• Food Delivery: A mature business, focusing on improving average order value (AOV), expanding restaurant partnerships, and enhancing customer experience through initiatives like Zomato Gold.
• Quick Commerce (Blinkit): A high-growth segment with a focus on rapid delivery (under 15 minutes), expanding its product assortment beyond groceries, and optimising its dark store network. The significant growth demonstrates the success of the Blinkit acquisition.
• Going-Out: This segment presents significant untapped potential. Focus is on expanding its reach, improving its offerings (including ticketing for events), and leveraging its data to drive growth.
• B2B Supplies (Hyperpure): A strategic segment aiming to improve profitability through better sourcing, increased margins on value-added products, and expansion of its service area and offerings to other B2B clients.

III. Risks:

The annual report identifies many key risks:

• Brand Reputation: Negative publicity, customer complaints, and intellectual property issues pose significant threats to Zomato’s brand image.
• Customer Experience: Maintaining high service quality, reliability, and consistency in pricing is essential to retain customers and sustain growth.
• Technology: Cybersecurity threats, app downtime, and technological obsolescence can disrupt operations and damage reputation.
• People Management: Attracting, retaining, and developing top talent, including addressing succession planning, is essential.
• Business Strategy: The need for a robust strategy to adapt to market changes, develop new products and services, and manage the scalability of its operations is highlighted.
• Competition: Intense competition from existing players and new entrants requires agility and continuous innovation to maintain a competitive edge.

IV. ESG Initiatives:

Zomato demonstrates a commitment to ESG through many initiatives:

• Climate Conscious Deliveries: Aiming for 100% EV-based deliveries by 2030 and net-zero emissions across the food delivery value chain by 2033. Significant progress was made in FY24 with a 4x increase in EV-based deliveries.
• Waste-Free World: Focus on reducing waste through initiatives such as “don’t send cutlery” (reducing cutlery waste by 75%), promoting plastic-free packaging (“PFO” label for restaurants), and the Plastic-Free Orders Packathon supporting startups in sustainable packaging.
• Zero Hunger: Supporting Feeding India’s daily feeding program, providing meals to underprivileged children.
• Inclusive Growth: Supporting the growth of MSMEs and gig workers through various programs and initiatives and increasing the representation of women, PwDs, and other under-represented groups within the workforce.
• Health, Safety, and Wellbeing: Implementing safety training programs, providing insurance benefits (including maternity benefits) for delivery partners, and establishing a network of rest points.
• Customer Centrality: Continuously improving customer experience through innovations, service enhancements, and feedback mechanisms.
• Governance: Maintaining high standards of corporate governance, implementing a strong whistleblower policy, and securing relevant certifications.

V. Conclusion:

Zomato’s FY24 annual report paints a picture of a company experiencing significant growth and achieving profitability across its various business segments. The focus on technology, customer experience, and strategic investments has driven this success. However, the report also transparently outlines the risks the company faces, especially in the fast-evolving technology and food delivery landscape. Its strong commitment to ESG initiatives positions the company to navigate these challenges while fostering a positive impact on its various stakeholder groups. The long-term success of Zomato will depend on its ability to effectively manage the identified risks and continue innovating and adapting to the changing market dynamics.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The provided annual report shows values for both consolidated and standalone financial statements. Here’s a breakdown of the requested figures in INR Crores:

Consolidated Financial Statements (as of March 31, 2024):

• Total Assets: 23,356
• Current Assets: 5,458
• Cash and Cash Equivalents: 309
• Accounts Receivable (Trade Receivables): 794
• Inventories: 88

Standalone Financial Statements (as of March 31, 2024):

• Total Assets: 24,325
• Current Assets: 3,547
• Cash and Cash Equivalents: 181
• Accounts Receivable (Trade Receivables): 69
• Inventories: 0

Important Note: These figures are rounded to the nearest crore, as per the report’s presentation. The report also uses adjusted figures, which are non-GAAP measures and are different from the figures shown above. Therefore, for a truly accurate and complete picture, refer to the detailed notes within the original annual report.

Liability Analysis #

Here’s a breakdown of the liability figures from Zomato’s FY24 annual report, again in INR Crores and rounded to the nearest crore as presented in the report:

Consolidated Financial Statements (as of March 31, 2024):

• Total Liabilities: 2,950
• Current Liabilities: 2,083
• Long-Term Debt (Borrowings): 0 (Note: There’s a small amount of long-term debt shown in the comparative figures for the previous year (FY23), but it is not present in the current year’s figures.)
• Accounts Payable (Trade Payables): 886

Standalone Financial Statements (as of March 31, 2024):

• Total Liabilities: 1,550
• Current Liabilities: 1,394
• Long-Term Debt (Borrowings): 0 (Note: Similar to consolidated, long-term debt is present only in the previous year’s figures.)
• Accounts Payable (Trade Payables): 481

Important Note: As with the assets, these numbers are rounded and represent the figures as explicitly stated in the report. For precision, you should always refer to the detailed breakdowns within the original annual report’s notes to the financial statements. There are also different liability classifications used within those notes, offering additional detail on the composition of payables.

Equity Analysis #

The shareholders’ equity, retained earnings, and share capital values for Zomato Limited in FY24, again expressed in INR Crores and rounded as presented in the report, are:

Consolidated Financial Statements (as of March 31, 2024):

• Shareholders’ Equity (Equity Attributable to Owners of the Parent): 20,413
• Retained Earnings: (6,024) (Note: This is a deficit, not a positive value.)
• Share Capital (Equity Share Capital): 868

Standalone Financial Statements (as of March 31, 2024):

• Shareholders’ Equity: 22,775
• Retained Earnings: (3,604) (Note: This is also a deficit.)
• Share Capital (Equity Share Capital): 868

Important Considerations:

• Rounding: Remember these figures are rounded to the nearest crore. For precise figures, consult the original annual report.
• Other Equity: The “Other Equity” section in both statements includes various reserves (securities premium, share-based payment reserve, etc.) that significantly contribute to the total shareholders’ equity. The retained earnings figure is just one component within the broader equity picture.
• Deficit: The negative retained earnings figures indicate accumulated losses over the company’s history. However, the overall equity is positive due to other equity components such as share premium and share-based payment reserves.

Always refer to the original report for the most precise and detailed information. The notes accompanying the financial statements provide a much more complete view of the equity composition.

Income Statement #

Operating Performance #

The Zomato FY24 annual report provides both standalone and consolidated figures. Here’s a summary of the key income statement items in INR Crores, rounded to the nearest crore as presented in the report:

Consolidated Financial Statements:

• Revenue from Operations: 12,114
• Cost of Revenue (Cost of Goods Sold): 2,882
• Gross Profit: 9,232 (Revenue - Cost of Revenue)
• Operating Expenses: 9,779 (This is calculated by subtracting the operating profit from the revenue. The report does not explicitly state “operating expenses” as a single line item. Other expenses such as employee benefits, depreciation, and other operating expenses are listed separately.)
• Operating Income: 235 (Revenue - Operating Expenses). (The report does not explicitly state “operating income,” but it can be calculated by subtracting operating expenses from the Revenue)

Standalone Financial Statements:

• Revenue from Operations: 6,622
• Cost of Revenue (Cost of Goods Sold): 5
• Gross Profit: 6,617 (Revenue - Cost of Revenue)
• Operating Expenses: 5,070 (The report does not explicitly list “operating expenses” as a line item. This number is calculated by subtracting the operating profit from the Revenue)
• Operating Income: 1,552 (Revenue - Operating Expenses)

Important Notes:

• Rounding: The figures are rounded to the nearest crore, as per the report. For precise numbers, consult the original document.
• Other Income: The “Other Income” line item is not included in the above operating income figures. These represent income from sources other than the main operations.
• Exceptional Items: In the Standalone Statement of Profit and Loss, exceptional items of INR 39 crore are subtracted from the profit before tax to arrive at profit before tax. These items are not included in the operating income calculation.
• Calculations: The operating expenses and operating income are calculated based on the provided information. These aren’t directly listed as line items in the report.

Always refer to the original annual report for the most accurate and complete information. The notes to the financial statements will offer additional details and clarifications on how these figures are calculated.

Bottom Line Metrics #

Here’s a summary of Zomato’s net income, EBITDA, basic EPS, and diluted EPS for FY24, again in INR Crores and rounded as presented in the report:

Consolidated Financial Statements:

• Net Income (Profit After Tax): 351
• EBITDA: 42 (This is explicitly stated in the Management Discussion and Analysis section, not as a line item on the income statement.)
• Basic EPS: 0.41
• Diluted EPS: 0.40

Standalone Financial Statements:

• Net Income (Profit After Tax): 1,371
• EBITDA: This is not explicitly provided in the standalone financial statements, it needs to be calculated using the standalone figures (profit before tax, depreciation and amortization, interest, and other income)
• Basic EPS: 1.61
• Diluted EPS: 1.57

Important Considerations:

• Rounding: The figures are rounded to the nearest crore or the nearest paisa (for EPS). Precise figures are available in the original annual report.
• EBITDA Calculation: For the standalone EBITDA, it is essential to refer to the standalone statement of profit and loss and calculate using the formula.
• Non-GAAP Measures: The annual report uses both GAAP and non-GAAP measures. EBITDA is a non-GAAP measure. The report highlights Adjusted EBITDA as a key performance indicator, presenting separate numbers for that metric.

To obtain the most accurate values, consult the original Zomato annual report. The notes to the financial statements will offer further details and clarify the calculation methodologies used for these key metrics.

Cash Flow #

Cash Flow Components #

Here’s a summary of Zomato’s cash flow statement data for FY24, again in INR Crores and rounded as reported:

Consolidated Statement of Cash Flows:

• Cash Flow from Operating Activities: 646
• Cash Flow from Investing Activities: (1,301)
• Cash Flow from Financing Activities: (207)

Standalone Statement of Cash Flows:

• Cash Flow from Operating Activities: 1,379
• Cash Flow from Investing Activities: (1,301)
• Cash Flow from Financing Activities: (20)

Important Notes:

• Rounding: These figures are rounded to the nearest crore, as presented in the report. Precise figures can be found in the original document.
• Non-Cash Items: The cash flow statements often include adjustments for non-cash items (like depreciation, share-based payments, etc.) that impact net income but not cash. These are reflected in the reconciliation of net income to cash flow from operations. Review the notes to the financial statements to understand these adjustments completely.
• Investing and Financing Activities: The investing activities section includes details on capital expenditures, investments, and divestments. The financing activities section provides information on equity issuances, debt repayments, and other financing transactions. The annual report details these items within each section of the cash flow statements.

Always refer to the original Zomato annual report to get the complete and most precise values. The notes provide important context and details about the composition of these cash flows.

Cash Flow Metrics #

The Zomato FY24 annual report doesn’t explicitly state “free cash flow” as a line item. Free cash flow is a non-GAAP measure, calculated differently by various entities. To determine it, we need to make some assumptions and use the information provided in the cash flow statements and notes.

To calculate free cash flow (FCF), a common approach is:

FCF = Cash Flow from Operations - Capital Expenditures (CAPEX)

Using this formula and the rounded figures from the cash flow statements:

Consolidated:

• Cash Flow from Operations: 646 crore
• Capital Expenditure (CAPEX): This isn’t explicitly stated, but can be inferred by examining the “Cash flows from investing activities.” The major CAPEX component is the purchase of property, plant, and equipment, which totalled (215) crore. Therefore for simplicity purposes, we can assume CAPEX to be (215) crore.
• Free Cash Flow (FCF): Approximately 861 crore (646 + 215)

Standalone:

• Cash Flow from Operations: 1,379 crore
• Capital Expenditure (CAPEX): Similar to consolidated, we’ll approximate CAPEX to (38) crore. This is the sum of the purchase of property, plant, and equipment and capital work in progress. Therefore for simplicity purposes, we can assume CAPEX to be (38) crore.
• Free Cash Flow (FCF): Approximately 1,417 crore (1,379 + 38)

Dividends Paid:

The Board report explicitly states that no dividend was paid or proposed during FY24.

Capital Expenditures (CAPEX):

The CAPEX figure isn’t directly presented as a single line item in the cash flow statement; however, we can extract a fair approximation from the investing activities. For consolidated statements, we have a net figure of (1,301) crore, for standalone this is (1,301) crore. Further clarification about the exact composition of CAPEX would require analysis of the notes accompanying the cash flow statements.

Important Note: These FCF calculations are estimates based on the available data and a standard FCF calculation methodology. For precise FCF figures, along with a detailed breakdown of CAPEX, refer to the original annual report and any supplemental financial materials provided by Zomato. The company might use a different calculation approach to determine FCF.

Financial Ratios #

Profitability Ratios #

To calculate profitability ratios, we’ll use the rounded figures from the consolidated and standalone financial statements. Remember these are approximations; precise calculations should be done using the unrounded figures directly from the original annual report.

Consolidated Financial Statements:

• Gross Profit Margin: (9,232/12,114) * 100% = 76.2% (approximately)
• Operating Profit Margin: (235/12,114) * 100% = 1.9% (approximately) (Operating income is calculated, see previous response)
• Net Profit Margin: (351/12,961) * 100% = 2.7% (approximately)
• Return on Equity (ROE): (351/19,453) * 100% = 1.8% (approximately) (Using the average of beginning and ending equity for the year, as is standard practice. The report does not provide an average.)
• Return on Assets (ROA): (351/21,599) * 100% = 1.6% (approximately) (Using the average of beginning and ending assets.)

Standalone Financial Statements:

• Gross Profit Margin: (6,617/6,622) * 100% = 99.9% (approximately)
• Operating Profit Margin: (1,552/6,622) * 100% = 23.4% (approximately)
• Net Profit Margin: (1,371/7,542) * 100% = 18.2% (approximately)
• Return on Equity (ROE): (1,371/20,806) * 100% = 6.6% (approximately)(Using the average of beginning and ending equity for the year, as is standard practice. The report does not provide an average.)
• Return on Assets (ROA): (1,371/21,927) * 100% = 6.2% (approximately)(Using the average of beginning and ending assets for the year, as is standard practice. The report does not provide an average.)

Important Considerations:

• Rounding: These calculations are based on rounded figures. For precise ratios, use the unrounded data from the original financial statements.
• Data Used: Operating income is a calculated figure, not directly reported. The calculation used here assumes certain expense categories constitute “Operating Expenses.” Review the report’s detailed expense breakdown for more granular analysis.
• Average Balances: ROE and ROA calculations typically use average equity and average assets for the year. The provided report does not explicitly state average values and therefore beginning and ending balances for the year are used.
• Non-GAAP Measures: The report also uses non-GAAP measures (Adjusted EBITDA margin, etc.) for analysis. These measures provide a different perspective on profitability and are also shown in the report.

Always consult the original Zomato annual report for precise figures and the full context of their calculations. The notes to the financial statements will offer significant insights into the components of each metric.

Liquidity Ratios #

Here’s a calculation of Zomato’s liquidity ratios for FY24, using the rounded figures from the annual report. Remember, these are approximations; precise calculations require using the unrounded numbers from the original report.

Consolidated Financial Statements (as of March 31, 2024):

• Current Ratio: Current Assets / Current Liabilities = 5,458 / 2,083 = 2.6 (approximately)
• Quick Ratio: (Current Assets - Inventories) / Current Liabilities = (5,458 - 88) / 2,083 = 2.5 (approximately)
• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities = 309 / 2,083 = 0.15 (approximately)

Standalone Financial Statements (as of March 31, 2024):

• Current Ratio: Current Assets / Current Liabilities = 3,547 / 1,394 = 2.5 (approximately)
• Quick Ratio: (Current Assets - Inventories) / Current Liabilities = (3,547 - 0) / 1,394 = 2.5 (approximately)
• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities = 181 / 1,394 = 0.13 (approximately)

Important Considerations:

• Rounding: These calculations use rounded figures. For precise ratios, use the unrounded data from the original financial statements.
• Inventory: The standalone statement shows zero inventory. This significantly affects the quick ratio calculation for the standalone figures.
• Other Liquid Assets: The quick ratio excludes less liquid current assets (like prepaid expenses and other receivables) to provide a more conservative measure of short-term liquidity. The cash ratio is the most conservative, focusing only on the most liquid assets.

Always consult Zomato’s original annual report for precise values and a full explanation of their calculation methodologies. The notes accompanying the financial statements often provide additional details on the composition of current assets and liabilities.

Efficiency Ratios #

Calculating efficiency ratios requires revenue and average asset/inventory/receivable values. The provided Zomato annual report gives year-end values, not averages. Using year-end values will result in an underestimation of turnover ratios (because turnover is calculated using averages). To get accurate ratios, you should calculate using the average of the beginning and ending balances for each asset or liability from the balance sheet. However, we will proceed with the year-end values for approximations.

Consolidated Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: Revenue / Total Assets = 12,961 / 23,356 = 0.56 (approximately)
• Inventory Turnover: Cost of Goods Sold / Average Inventory = 2,882 / 88 = 33 (approximately)(Using year-end inventory)
• Receivables Turnover: Revenue / Average Trade Receivables = 12,961 / 794 = 16 (approximately)(Using year-end receivables)

Standalone Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: Revenue / Total Assets = 7,542 / 24,325 = 0.31 (approximately)
• Inventory Turnover: Cost of Goods Sold / Average Inventory = 5 / 0 = Undefined (Note: Inventory is reported as zero at year-end. Inventory turnover is not meaningful with a zero inventory balance. )
• Receivables Turnover: Revenue / Average Trade Receivables = 7,542 / 69 = 109 (approximately) (Using year-end receivables)

Important Considerations:

• Average Balances: The above calculations use year-end values instead of the average of beginning and ending balances. This method underestimates the turnover ratios. Accurate calculations necessitate using average balances from the balance sheet.
• Inventory Turnover: The standalone statement reporting zero inventory makes the inventory turnover ratio meaningless. This likely reflects Zomato’s business model, where inventory isn’t a significant component.
• Data Source: The calculations are based on the summary figures provided in the annual report. For precision, the numbers used for calculations should be drawn directly from the detailed balance sheet and income statement.

To obtain precise efficiency ratios, you must utilize the average balance sheet values for assets, receivables and inventory as detailed in the original Zomato annual report. The notes to the financial statements can provide context and further details on these calculations.

Leverage Ratios #

Calculating use ratios requires debt information. Zomato’s FY24 annual report shows a significant reduction or elimination of debt for both its consolidated and standalone financial statements. This impacts the calculation of these ratios. Let’s break down what we can determine:

Consolidated Financial Statements (as of March 31, 2024):

• Debt to Equity Ratio: Total Debt / Total Equity = 0 / 20,406 = 0 (approximately). (There is virtually no long-term debt)
• Debt to Assets Ratio: Total Debt / Total Assets = 0 / 23,356 = 0 (approximately)
• Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest Expense = This cannot be calculated from the provided data. EBIT is not explicitly stated, and while Interest Expense is mentioned (INR 72 Crore consolidated), the absence of long-term debt makes the ratio less informative. A very high interest coverage ratio is likely given that it is profitable and it has no long-term debt.

Standalone Financial Statements (as of March 31, 2024):

• Debt to Equity Ratio: Total Debt / Total Equity = 0 / 22,775 = 0 (approximately)
• Debt to Assets Ratio: Total Debt / Total Assets = 0 / 24,325 = 0 (approximately)
• Interest Coverage Ratio: EBIT / Interest Expense = Cannot be calculated from the provided data. The Standalone Statement of Profit and Loss does not provide EBIT as a line item.

Important Notes:

• Zero Debt: The near-zero debt levels significantly affect the debt ratios. The ratios are close to zero because the company has almost no debt. Such low debt levels make these ratios less useful for comparative analysis with companies that have substantial leverage.
• Interest Coverage: Calculating the interest coverage ratio requires EBIT (Earnings Before Interest and Taxes). This is not directly stated in the report, and would need to be calculated from other values on the income statement. Given the very low level of debt, the interest coverage ratio is likely to be very high, but a precise calculation is not possible from the available data.

To determine precise use ratios, especially a meaningful interest coverage ratio, consult the complete financial statements and notes provided in the original Zomato annual report. These would include the required values to perform the correct calculations. Remember that the absence of significant debt makes some of these traditional use ratios less valuable in evaluating the Company’s financial risk profile.

Market Analysis #

Market Metrics #

The Zomato FY24 annual report does not provide a market capitalization (market cap), P/E ratio, P/B ratio, dividend yield, or dividend payout ratio directly. These are typically found in financial news sources and market data providers, not within the company’s annual report itself. The annual report provides the underlying financial data needed to calculate some of them (e.g., earnings, book value), but others (market cap, share price) need to come from external sources.

Here’s why:

• Market Cap: This is calculated by multiplying the current market price per share by the total number of outstanding shares. The annual report provides the number of outstanding shares, but the market price fluctuates constantly and is obtained from stock exchanges.
• P/E Ratio (Price-to-Earnings Ratio): This is calculated by dividing the market price per share by the earnings per share (EPS). The report provides EPS, but the market price is obtained externally.
• P/B Ratio (Price-to-Book Ratio): This is calculated by dividing the market price per share by the book value per share. The report provides book value, but the market price comes from external sources.
• Dividend Yield: This is the annual dividend per share divided by the market price per share, expressed as a percentage. Since Zomato paid no dividends in FY24, the dividend yield is 0%.
• Dividend Payout Ratio: This is the percentage of net income paid out as dividends. Since Zomato paid no dividends, the dividend payout ratio is 0%.

To find these market-based ratios, you will need to consult a reputable financial website (like Google Finance, Yahoo Finance, Bloomberg, etc.) or a financial data provider. Input Zomato’s stock ticker symbol (usually ZOMATO in India) to access real-time or historical market data and then perform the calculations yourself using the EPS and book value per share information from the annual report.

Business Analysis #

Segment Analysis #

Zomato’s annual report details its business segments but does not provide precise market share data. Market share information would need to be sourced from external market research reports. Here’s a summary of the available information:

Business Segments:

Additional Details and Notes:

• Revenue Growth: The growth rates are calculated year-on-year (YoY) comparing to the financial year ended March 31, 2023.
• Operating Margin: The operating margin is calculated as Operating Income / Revenue. The report does not provide Operating Income as a single line item, making this calculation approximate based on other data. Note also that the Blinkit figures are non-comparable between FY23 and FY24 due to the acquisition only being completed mid-FY23.
• Market Share: The provided report does not contain market share data for these segments in India or UAE. Obtaining this would require referring to external market research data.
• Key Products: The description provides a general overview; the actual product offerings within each segment are far more detailed in the original annual report.
• Geographic Presence: This indicates the primary locations where each segment operates.

This table summarizes the information, but for complete details on products, services, revenue breakdowns (e.g., by region), and additional operational metrics within each segment, consult the original Zomato annual report.

Risk Management #

Risk Assessment #

Zomato’s annual report highlights many key risk factors, but it doesn’t explicitly quantify “impact severity” or “likelihood” with numerical scales. Instead, the report uses descriptive language to convey the potential impact and the probability of occurrence. The mitigation strategies outlined are also largely descriptive. To organize the information effectively, we’ll categorize and summarise the identified risks:

I. Key Risk Factors:

II. Overall Risk Assessment:

The report doesn’t assign specific probabilities or impact scores to these risks. However, it’s clear that technology, customer experience, and business strategy risks are considered to have significant potential for impacting the Company. Mitigation strategies are largely focused on proactive management, investment in technology and people, and continuous improvement. The report indicates that the company is actively monitoring and addressing these risks. The identified trends suggest the need for continuous adaptation and strategic flexibility.

Disclaimer: This analysis is based on the provided text. For a complete understanding of Zomato’s risk profile, consult the original annual report and any additional disclosures made by the company.

Strategic Overview #

Management Assessment #

Zomato’s management discussion and analysis section highlights many key strategic elements, competitive advantages, market conditions, challenges, and opportunities. Here’s a synthesis of that information:

I. Key Strategies:

• Multi-Segment Approach: Zomato’s strategy hinges on diversifying across multiple segments (food delivery, quick commerce, going-out, B2B supplies) to mitigate risk and capitalize on growth opportunities in various market sectors. This reduces reliance on any single segment.
• Technological Innovation: Continuous investment in technology and data analytics to improve operational efficiency, personalize customer experiences, and develop new products and services (AI-powered features, improved logistics, etc.).
• Customer Centricity: Prioritizing customer satisfaction through improvements in service quality, delivery reliability, and offering value-added services (like Zomato Gold).
• Strategic Partnerships: Collaborating with various stakeholders (delivery partners, restaurants, technology providers, and other businesses) to strengthen its ecosystem and expand reach.
• Operational Efficiency: Focus on optimizing costs, improving logistics, and scaling operations to improve profitability and competitiveness.
• Brand Building: Sustaining a strong brand reputation through positive brand image, proactive management of negative publicity, transparent communications, and community engagement initiatives.

II. Competitive Advantages:

• Established Brand Recognition: Zomato’s strong brand recognition in the Indian market provides a significant competitive advantage.
• Extensive Network: A wide network of restaurant partners, delivery partners, and a large customer base provides a significant scale advantage.
• Technology Platform: Zomato’s robust technology platform provides a seamless customer experience, efficient operations, and data-driven insights.
• Data-Driven Decision Making: Use of data analytics to inform business decisions, personalize offers, and optimize operations.

III. Market Conditions:

• Evolving Consumer Preferences: Growing demand for convenience, speed, and various food choices; increasing adoption of online ordering and delivery; and high growth in the quick commerce space.
• Intense Competition: The food delivery and quick commerce markets are highly competitive, with established players and new entrants constantly vying for market share.
• Economic Conditions: Overall macroeconomic conditions (inflation, disposable income levels) can impact consumer spending and the profitability of businesses.
• Regulatory Environment: Compliance with evolving regulations regarding food safety, data privacy, and labor laws.

IV. Challenges:

• Profitability: Achieving sustainable profitability in a highly competitive environment and managing losses in certain high-growth segments, especially quick commerce.
• Competition: Maintaining a competitive edge against other established and emerging players in the food delivery and quick commerce sectors.
• Operational Scalability: Expanding operations efficiently and managing the complexities of a large network of partners.
• Technology Risk: Addressing cybersecurity concerns and ensuring the reliability of its technology platform.
• Regulatory Compliance: Adhering to the constantly evolving regulations in different jurisdictions.

V. Opportunities:

• Growth in Quick Commerce: The quick commerce sector holds significant growth potential, especially in India’s rapidly expanding online retail market.
• Expansion of Going-Out Segment: Expansion of dining-out services and event ticketing.
• New Product/Service Development: Innovation and launch of new products and services to better cater to evolving customer preferences (e.g., healthy food options, new cuisines, etc.).
• Strategic Acquisitions: Identifying suitable acquisition targets to improve its capabilities, expand into new markets, or diversify its service offerings.
• International Expansion: Expanding its services to other countries.

VI. Management’s View:

Zomato’s management sees a positive outlook, citing the transition to profitability and the strong growth across multiple segments as evidence of its strategy’s success. However, they acknowledge the challenges in maintaining this momentum and effectively managing the identified risks. Their continued focus on innovation, operational efficiency, and customer satisfaction will be key to capitalize on the significant market opportunities.

Disclaimer: This is a summary based on the information provided in the annual report. For a complete understanding of Zomato’s strategic direction and the management’s assessment, consult the original report.

ESG Ratings #

The Zomato annual report mentions many ESG ratings from different agencies. These ratings provide an independent assessment of the company’s environmental, social, and governance performance. Note that ESG ratings methodologies vary across agencies, making direct comparisons challenging.

Here’s a summary of the ESG ratings mentioned:

• MSCI: Rated AA (Sustainability Leader) in January 2023.
• S&P Global: Achieved an ESG score of 41 in May 2024, placing it in the 96th percentile of its peer group. This represents a 168% increase from the previous year’s score.
• Sustainalytics: Rated Low Risk (score 16.9) in May 2024.
• FTSE Russell: Became a member of the FTSE4Good Global Index in June 2023.

The report highlights that Zomato has the best ESG rating among major global food delivery companies. However, it is essential to note that ESG ratings are dynamic, constantly evolving, and interpretations may differ based on each agency’s specific methodology and scoring system. To get the most up-to-date ratings and a complete understanding of the methodologies employed, one should consult the individual rating agencies’ websites directly.

ESG Initiatives #

Zomato’s annual report details its various environmental, social, and governance (ESG) initiatives, carbon footprint, and sustainability goals. Here’s a summary:

I. Environmental Initiatives:

• Climate Conscious Deliveries: The company is committed to achieving 100% electric vehicle (EV)-based deliveries by 2030 and net-zero emissions across its food delivery value chain by 2033. In FY24, they reported a 4x year-on-year increase in EV-based deliveries.
• Waste-Free World: Zomato implemented many initiatives to reduce waste:
  • “Don’t Send Cutlery”: Reduced cutlery waste by 75% year-on-year.
  • 100% Plastic Neutral Deliveries: Voluntarily recycled 30,000 MT of plastic waste in total, exceeding its target for the year.
  • Plastic-Free Orders (PFO) initiative: Highlighting restaurants using plastic-free packaging.
  • Plastic-Free Orders Packathon: A competition to promote sustainable packaging solutions.
• Energy Efficiency: Using LED lights and monitors in offices, optimising electrical equipment usage.

II. Carbon Footprint:

The report focuses on Scope 1 and 2 emissions, reporting that they have been kept at zero through carbon offsets and renewable energy certificates (IRECs). Scope 3 emissions (those from its value chain, predominantly delivery partners) are reported separately, highlighting the significant reduction in last-mile delivery emissions through the EV initiative. The specific tonnes of CO2e for Scope 3 emissions are listed in the report but are substantial.

III. Social Initiatives:

• Zero Hunger: Partnership with Feeding India to provide nutritious meals to underprivileged children. They reported serving over 1.2 lakh meals daily.
• Delivery Partner Welfare: Various initiatives aimed at improving the well-being of delivery partners, including:
  • Maternity benefits: providing monetary assistance during pregnancy and childbirth.
  • Accident, health, and loss-of-pay insurance: Detailed coverage to mitigate risks.
  • Emergency ambulance response: Improving response times for medical emergencies.
  • Rest points: Establishing a network of designated rest areas for delivery partners.
  • Emergency First Responder Training: Training delivery partners in basic first aid and CPR.
  • Scholarships: Providing scholarships for the children of delivery partners.
• Inclusive Growth: Supporting the growth of micro, small, and medium-sized restaurants (MSMEs) and promoting diversity and inclusion within its workforce.

IV. Governance Practices:

• Board Composition: A various board with a balance of executive, non-executive, and independent directors, including a significant representation of women.
• Board Committees: Multiple committees (audit, nomination and remuneration, risk management, etc.) to ensure effective oversight of various aspects of the business.
• Whistleblower Policy: A robust mechanism for reporting unethical behavior and ensuring transparency.
• Compliance: Adherence to relevant laws, regulations, and corporate governance standards. Securing ISO certifications for information security and occupational health and safety.

V. Sustainability Goals (2030):

Zomato outlines ambitious sustainability goals for 2030, aligned with the UN Sustainable Development Goals. These encompass all its thematic areas. The specific targets are detailed and include:

• Climate Conscious Deliveries: Significant reduction in last-mile delivery emissions and a substantial increase in the use of electric vehicles.
• Waste-Free World: Achieving 100% plastic-neutral deliveries and reducing food waste through various initiatives.
• Zero Hunger: Expanding its efforts to combat hunger and malnutrition.
• Inclusive Growth: Supporting thousands of MSMEs and gig workers; and fostering a more various workforce.
• Diversity, Equity, and Inclusion (DE&I): Improving the representation of various groups within the organization.
• Health, Safety, and Wellbeing: Reducing workplace accidents and promoting the overall health and wellbeing of stakeholders.
• Customer Centrality: Improving services for end-users of its platform and providing better resources to its restaurant partners.
• Governance: Maintaining high standards of corporate governance, accountability and transparency.

The report provides detailed progress reports against many of these goals in FY24, indicating substantial progress in many areas, though all targets are long-term and will require continued effort.

Disclaimer: This is a summary. For complete details on Zomato’s ESG initiatives, goals, and progress reports, consult the original annual report. Specific numbers cited are rounded and should be considered approximations.

Additional Information #

Operational Metrics #

The Zomato FY24 annual report does not explicitly state R&D expenditure as a separate line item in its financial statements. While Zomato heavily emphasizes its technology and innovation, the costs associated with this are likely integrated within broader expense categories such as “IT support services,” “other expenses,” and possibly “outsourced support costs.” Extracting a precise R&D figure would require a detailed breakdown of those expenses, which is not readily available in the summary provided.

Employee Count:

As of March 31, 2024, Zomato had a total of 4,440 employees (including permanent and other than permanent employees) and 316 workers (including permanent and other than permanent workers). This is stated explicitly in the report. The report also notes that delivery partners are considered value chain partners, and not included in this employee count.

To determine the actual R&D expenditure, you’d need to delve into Zomato’s more detailed financial filings or contact the company directly for this specific information. The available information only shows total expenses and does not offer a segment-specific view of the R&D investment.

Key Events #

The Zomato FY24 annual report highlights many significant events during the year:

• Continued Strong Growth and Profitability: The most significant event is the company’s overall strong financial performance, achieving profitability for the first time and demonstrating substantial revenue growth across all its business segments.
• Liquidation of International Subsidiaries: The company closed down many of its international subsidiaries (in Australia, New Zealand, Portugal, Chile, Vietnam, and Indonesia). This represents a strategic shift in focus towards its core Indian market and possibly an acknowledgment that those international ventures were not meeting expectations.
• Sale of Stake in ZMT Europe LDA: Zomato sold its 30% stake in its Portuguese associate company, ZMT Europe LDA. This is another indication of a retrenchment of international activities and a focusing of resources.
• Share Allotments under ESOPs: Significant number of equity shares were allotted to employees through the exercise of stock options under various employee stock option plans (ESOPs). This is a common practice for technology companies to attract and retain talent.
• Acquisitions: The report primarily focuses on the impact of prior year acquisitions (Blinkit and the Warehousing division of HOTPL) during the current fiscal year.
• Initiatives Launches: Several new initiatives were launched during the year, including:
  • Zomato Everyday (affordable home-style meals)
  • Zomato Legends (iconic dishes from legendary restaurants)
  • Food on Train (delivering food to train passengers)
  • India’s first large order fleet (using custom EVs)
  • Healthy food options within the Zomato app.
• Regulatory Developments: The report mentions the impact of compliance with the evolving regulatory environment (e.g., GST on delivery charges). The company is involved in discussions with regulatory authorities related to various aspects of the business, especially concerning gig workers.
• ESG Progress: Meaningful progress was made towards many ESG goals, especially in climate-conscious deliveries (increased EV adoption), waste reduction, and delivery partner welfare initiatives.
• ESG Ratings: The report notes Zomato achieved leading ESG scores from many rating agencies. (See previous responses for details).

These are the key events highlighted. For a complete list of all events, including less prominent ones, refer to the original annual report. The original report will include things like changes in the senior management team and board composition that might also be considered significant events.

Audit Information #

Auditor’s Opinion:

The independent auditor, Deloitte Haskins & Sells, issued an unmodified (clean) opinion on both the consolidated and standalone financial statements of Zomato Limited for the year ended March 31, 2024. This means the auditors found the financial statements to be presented fairly, in accordance with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles in India.

However, the auditor’s report also includes:

• Emphasis of Matter: The auditors drew attention to the show-cause notices (SCNs) received by Zomato from GST authorities regarding GST on delivery charges. While Zomato believes it has a strong case, the ultimate outcome remains uncertain.
• Key Audit Matters: The auditors identified key areas of focus during their audit, including:
  • Fair valuation of investments in other entities.
  • Revenue recognition, given the complexity of Zomato’s IT systems.
  • Impairment assessment of goodwill.

These are areas where significant judgments and estimates were used by management, requiring heightened scrutiny during the audit process.

Key Accounting Policies:

The annual report details Zomato’s key accounting policies, which are essential for understanding how the financial numbers are arrived at. These policies generally comply with Indian Accounting Standards (Ind AS). Some of the most important ones include:

• Business Combinations: The acquisition method is used to account for business combinations (like the Blinkit acquisition). This involves recognizing identifiable assets and liabilities at fair value at the acquisition date. Goodwill is recognized if the purchase price exceeds the net fair value of identifiable assets acquired.
• Revenue Recognition: Revenue is recognized based on the transfer of control of promised goods or services, differentiating between services rendered at a point in time versus those rendered over time. This is especially relevant given Zomato’s multi-faceted business model.
• Financial Instruments: The report details how different financial assets (investments, receivables, etc.) and liabilities are classified (amortized cost, fair value through profit or loss, fair value through other detailed income) and measured. This section includes considerable detail on the valuation techniques and inputs used, especially for those instruments without readily available market prices.
• Impairment of Assets: The Company describes its methodology for assessing and recognizing impairment losses on its non-financial assets (like property, plant, and equipment, intangible assets) and financial assets (investments).
• Leases: Zomato adopts the single recognition and measurement model for leases (except for short-term and low-value leases), recognizing both right-of-use assets and lease liabilities.
• Share-Based Payments: The accounting for employee stock options (ESOPs) is explained, including the valuation methods used and the recognition of expense over the vesting period.
• Taxes: The report details the treatment of current and deferred taxes, highlighting areas where significant judgment was applied in the calculation.
• Foreign Currency: The report details how transactions and balances in foreign currencies are translated into the functional currency (INR). Translation differences are recognized in OCI.
• Segment Reporting: The report explains the criteria used for identifying and reporting operating segments, how revenues and expenses are allocated to each segment and how it reflects the changes in business model during the year.

For a complete and thorough understanding of Zomato’s accounting policies, always refer to the original annual report. The notes to the financial statements provide a detailed list of all accounting policies applied in the preparation of the financial statements.