BigBasket has got a breather with capital worth nearly Rs. 45 crores in debt funding. Venture debt company Trifecta Capital has contributed the capital. BigBasket has been hoping for Rs. 100 crores in capital. it recently applied to the government for permission to get investments from overseas. The grapevine mentions that it is hoping to up the ante with an expectation of Rs. 650 crores.
The investors are happy with the company’s path. Nilesh Kothari, co-founder of Trifecta Capital, said,
“They have leveraged economies of scale, technology, supply chain and logistics, backward integration and product mix to create a viable, high growth business that is delivering significant value to customers.”
Plans for better supply chain, fresh produce
CEO Hari Menon says,
“We are in the last leg of a pilot which will ensure that all fruits and vegetables are maintained at constant temperature and thereby improve shelf life of the produce by almost 10 days. This will be done using large-scale equipment such as pre-coolers and ventilators. Funding such capex requirements is best done through debt.,” he noted, “It is crucial that we maintain the quality right up to the last mile.”
Some hurdles in the past
BigBasket has had (and continues to have) its share of troubles in the past including:
- DIPP asked the company to establish whether it follows an inventory model or marketplace model
- The company’s losses grew by four times from the previous year
- Competition from not only its contemporaries (Grofers) but also from biggies like Amazon and Godrej (Nature’s Basket)
Grocery is a lucrative field because people purchase groceries on a regular and recurring basis, but it’s also a risky business. Profits are very low, and there have been several casualties in the past. Ola’s hyperlocal service, PepperTap, Grofers, and Local Banya are some examples of companies that began with promise, but had to fold up due to the lack of finances and other problems.
Make the right moves
BigBasket’s capital infusion gives hope to other players in the field. It indicates that there is scope for a steady growth and possibility of profit soon. BK Birla, founder of ZopNow (no longer with the company now) feels that the key is in getting loyal customers to stick to you, as repeat business is a given. In a comment on Quora, Birla suggests companies find a right balance of verticals to offset the low margins.