Swiggy Case Study: Fundings, Business Model, Financials, and SWOT Analysis
If you are a foodie who enjoys placing online orders for meals, you have probably used Swiggy, but have you ever thought about the operations of this company, including its earnings, profits, etc.?
Worry not because today’s blog will cover details about Swiggy’s business model, financials, and SWOT Analysis.
Swiggy Company Overview
Swiggy is an Indian food delivery platform that offers customers the ease of ordering from their preferred restaurants while sitting at home. In addition, they offer an instant package delivery service known as Swiggy Genie and an on-demand quick-grocery-delivery business under the name Instamart.
Swiggy was established in 2014 in Bangalore. The founders are – Sriharsha Majesty, Nandan Reddy, and Rahul Jaimini. In 2015, the company launched its mobile application after securing its first round of funding.
In the beginning, Swiggy had six delivery executives and 25 partner restaurants. Today, they operate in more than 500 Indian cities and have more than 3 lakh restaurant partners, 10 crore deliveries, and more than 2 lakh delivery partners.
Funding
Swiggy has raised a total of $3.62 Billion over 17 funding rounds. Some of its most prominent ones are given below:
| Date of Funding | Funding Amount | Round Name | Post Money Valuation | Investors |
|---|---|---|---|---|
| Feb 06, 2015 | $970K | Series A | $4.02M | Elevation Capital |
| Dec 31, 2015 | $35M | Series C | $134M | Harmony Partners, RB Investments, Accel, Norwest Venture Partners, DST Global, Elevation Capital |
| May 29, 2017 | $80M | Series E | $399M | Naspers, Accel, Bessemer Venture Partners, Harmony Partners, Norwest Venture Partners, Elevation Capital |
| Dec 20, 2018 | $1B | Series H | $3.2B | Naspers, Tencent, DST Global, Hillhouse, Wellington, Meituan, Coatue |
| Apr 05, 2021 | $1.25B | Series J | $5.25B | Prosus, SoftBank Vision Fund, Alpha Wave, Amansa Capital, Accel, Qatar Investment Authority, GIC, Naspers, INQ Holdings, Alpha Wave, Lathe Investment, Wellington, Goldman Sachs Investment Partners, SoftBank, Carmignac, Goldman Sachs, Think Investments |
Business Model
The company serves as a middleman between customers and restaurants through its smartphone application. They permit customers to browse restaurant menus and place direct orders.
Most restaurants the organization works with are chain restaurants and local eateries. The restaurant also helps them reach a wider audience and increase their visibility.
They also maintain a network of delivery partners known as Swiggy delivery executives. Partners pick up orders from the restaurant and drive them to customers’ locations.
Revenue Model
The company earns revenue through 4 broad segments:
- Commissions – Swiggy charges commissions from restaurants for each order placed through the platform. Typically, the commissions fall within the range of 15 % – 25% of the order value.
- Digital Real-estate fee – Swiggy charges restaurants to give them more visibility on the platform.
- Delivery Fee – In exchange for delivering the food quickly, Swiggy charges customers a delivery fee.
- Subscription Fee – Swiggy offers a subscription service to customers that allows users to deliver food without paying a delivery fee, along with other benefits.
Note – The company is not listed on any stock exchanges, so the financials are not released in the public domain. Therefore, we have estimated these segments based on the services offered.
Financial Highlights
Balance Sheet
| Particulars | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Non-Current Assets | 5,26,640 | 3,18,070 | 1,31,580 |
| Current Assets | 2,21,120 | 11,02,500 | 2,02,400 |
| Total Assets | 11,47,760 | 14,20,570 | 3,34,670 |
| Equity | 9,80,990.01 | 12,59,949.9 | 2,21,009.25 |
| Long Term Liabilities | 22,010 | 28,410 | 46,500 |
| Current Liabilities | 1,44,760 | 1,32,210.1 | 67,160.5 |
According to the above graph, the company’s non-current assets increased in value from Rs. 31,070 in FY 2022 to Rs. 5,26,640 in FY 2023. However, its current assets decreased significantly in FY 2023 compared to FY 2022.
Income Statement
| Particulars | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Revenue from operations | 4,65,330 | 3,55,710 | 2,00,800 |
| Total Income | 5,36,130 | 4,04,620 | 2,14,500 |
| Total Expenses | 8,88,600 | 6,74,090 | 3,31,050 |
| Profit before tax | (3,75,760) | (3,76,810) | (1,31,360) |
| Profit after tax | (3,75,760) | (3,76,810) | (1,31,360) |
The preceding table makes it clear that although the company’s revenue is growing year over year, its expenses are growing at the same rate, which means the business is still losing money.
Cash Flow Statement
| Particulars | 31st March 2023 | 31st March 2022 |
| Net Cash flow from operating activities | (38,633) | (24,729) |
| Cash flow from investing activities | 33,395 | (1,07,276) |
| Cash flow from financing activities | (604) | 1,36,703 |
It is clear from the cash flow statement that the company’s cash flow from investing activities increased, indicating that it had received income from the sale of property. In contrast, its cash flow from operating activities declined further. The cash flow from financing activities should not be given much weight as it reflects the funding received from institutional investors.
Note – As of 23rd March 2024, we could only find the past 2 years’ data for the cash flow statement.
KPIs
| Particulars | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Debt Equity Ratio | 0.09 | 0.06 | 0.32 |
| Net Profit Margin (%) | -70.09 | -93.13 | -61.24 |
| Return on Capital Employed (%) | -65.58 | -26.27 | -57.51 |
| Current Ratio | 4.29 | 8.34 | 3.01 |
| Return on Equity (%) | -38.30 | -29.91 | -59.44 |
The company’s debt-to-equity ratio decreased in 2022 compared to 2021. However, it increased slightly in 2023, indicating a rise in debt, but the number is still far too low and thus should not affect the company’s operations.
The company’s loss margins narrowed but still showcased the huge losses.
SWOT Analysis
Strengths
1. Due to its widespread clientele and high popularity, Swiggy is regarded as one of the sector’s top providers of food delivery services.
2. The company offers its customers a wide selection of cuisines thanks to its partnerships with various restaurants.
3. Swiggy always strives to incorporate cutting-edge features into its mobile app.
4. The company has strong investors supporting it, giving it the money it needs to grow.
Weaknesses
1. Swiggy’s business relies heavily on its delivery partners; it may affect its earnings if they are unavailable or on strike.
2. The business invests a lot of money in marketing and advertising to attract new clients and retain its current clientele.
3. Despite their efforts, the company is not able to generate a profit as it has been experiencing losses for the last 3 financial years.
4. The company faces intense competition from other players in the market, such as Zomato.
Opportunities
1. Swiggy hasn’t penetrated the tier 2 and tier 3 cities; therefore, concentrating on them could bring in new clients.
2. They can diversify their product line beyond food and grocery items.
3. They can form strategic alliances with cloud kitchens and other businesses, which will increase their income.
4. The business can package food products using environmentally responsible methods, drawing in customers who share its values.
Threats
1. Their operations may be impacted by any modifications in the policies regarding labor welfare or food safety rules.
2. The fees charged by them from restaurants are extremely high and thus could lead to restaurants switching to competitors. Such loss of partnerships could lead to reduced margins.
Conclusion
Swiggy is one of the biggest online food delivery services in India. Although the company has expanded quickly since its founding, it has been experiencing financial difficulties for a considerable amount of time. Though the food delivery industry is popular for its cash burn, Swiggy must find ways to turn profitable before the funding tap runs dry.
Frequently Asked Questions (FAQs)
Q1. Is Swiggy an Indian company?
Ans. Yes, Swiggy is an Indian company founded in the year 2014 and has its headquarters in Banglore.
Q2. What is the original name of Swiggy?
Ans. The original name of Swiggy is Bundle Technology Limited.
Q3. Is Swiggy a profit-making company?
Ans. Unfortunately, Swiggy is a loss making company and has been operating on periodic fundings.
Q4. Who is the CEO of Swiggy?
Ans. Mr. Rohit Kapoor is the CEO of Swiggy.
Q5. Is Swiggy listed on the Indian Stock Exchange?
Ans. No, swiggy is not listed on the stock exchange.
Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.
