Food delivery platform Swiggy, which is planning to raise Rs 3,750 crore through a fresh issue of shares, plans to use over Rs 982.40 crore towards investments in its material subsidiary, Scootsy. A material subsidiary is the one which has a significant impact on the consolidated revenues or assets of the parent company.
Out of the total investment allocated for Scootsy, Rs 559.10 crore will be utilised for opening about 538 dark stores, and the rest, Rs 423.30 crore, will go for license payments. A strong network of dark stores (a retail distribution centres for online orders) is essential for quick commerce players, especially to increase its market share.
The company proposes dark stores in cities where its existing dark stores operate now such as Mumbai, Pune, Bengaluru, Chennai, Hyderabad, New Delhi and Kolkata. According to the Draft Red Herring Prospectus (DRHP), the SoftBank-backed firm plans to set up these new dark stores between financial year 2025 and 2028.
As the quick commerce business is becoming more competitive, recently its rival Zomato-owned Blinkit announced plans to set up about 2,000 dark stores by the end of 2026.
As on June 30, 2024, Swiggy has opened 581 dark Stores as part of its quick commerce business segment, which are under Scootsy, on a leasehold basis.
Swiggy is also planning to invest Rs 586.2 crore in technology and cloud infrastructure. Currently, it has built technology infrastructure on the top of services provided by third party technology and cloud infrastructure vendors.
"We aim to further innovate, iterate and improve our technology stack to enhance the platform experience and offerings for all our users as well as our restaurant partners, merchant partners and brand partners, and improve our operational efficiency," Swiggy said in the DRHP.
Swiggy entered into an arrangement with Amazon Web Services India, effective till February 28, 2026, for availing services such as cloud storage and support services, database, computation and analytics services, site recovery and firewall services.
"Pursuant to the Technology Agreement, our company has a commitment to spend a total of ₹7,760.85 million ($93,000,000), over a term of three years till February 28, 2026, and an annual commitment to spend at least ₹ 2,086.25 million ($25,000,000) starting from March 1, 2023," the company said.
It has also earmarked Rs 929.50 crore for brand marketing and business promotion expenses for enhancing the brand awareness and visibility of its platform.
Swiggy's revenue from operation as of June 30, 2024 stood at Rs 3,222.21 crore compared to Rs 2,389.81 crore reported in the year-ago period. Swiggy's quick commerce platform Instamart, which currently operates in 42 cities, delivers groceries and other essentials across over 20 categories in 10-15 minutes.
Its quick commerce platforms have been launched in 10 new cities over the past two months, including Thrissur, Mangalore, Kanpur, Udaipur, Warangal and Salem, among others.