Indian food delivery company Swiggy has seen a six-fold increase in losses this financial year, which ended in March 2019 (FY19), according to reports.
The delivery company has had to deal with more expenses than usual as its been trying to expand in the country and keep up with competitors. The company’s expenses went up four times more than the year before.
Swiggy showed a net loss of ₹2,367 crore during FY19. In FY18, losses were ₹385 crore. Revenues were up as well, to ₹1,128.3 crore. Last year, it was ₹417 crore.
“FY 18-19 has been another strong year of execution for Swiggy as we continued to grow our dominant market leadership position. We saw a 4.2x increase in order volumes and a 2.8x increase in operating revenue despite a higher baseline, underscoring our ability to grow in a sustainable manner over the long-term. During the year, we made many strategic bets and investments in technology, brand and supply creation that have been the drivers of category growth in Indian food delivery and will bear fruit in Swiggy’s vision,” a Swiggy spokesperson said.
The company’s expenses increased significantly, from ₹841.4 crore a year ago to ₹3,659.1 crore. Many of the expenses were due to operational costs, which were ₹1,681.2 crore in FY19, with ₹1,594 in food costs alone.
Undelivered and cancelled orders took a bite out of revenue as well, at ₹113.4 crore. Swiggy said the amount includes “cost of orders cancelled by the customers after the orders have been picked up by the delivery partners … it also includes cash loss incurred due to absconding of the delivery partners with cash.”
One of Swiggy’s biggest competitors, Zomato, has also incurred costs due to expansion. The company says it’s in 500 cities in India, and both companies have been increasingly involved in the use of so-called cloud kitchens, which prepare food for the sole purpose of delivery.