Zepto’s Financial Surge Amidst Work Culture Controversy

In the fiscal year 2024, Zepto, a formidable competitor to Blinkit, experienced a surge in its expenses by 71.6 per cent, amounting to Rs 5,747 crore. This financial year was marked by the company incurring losses of Rs 1,248.6 crore. The financials of the company reveal a negative return on capital employed (ROCE) of -119.3 per cent and an EBITDA margin of -23.81 per cent.

The operational revenue of Zepto for FY24 was Rs 4,454 crore. To put it into perspective, the company’s expenditure rose from Rs 3,350 crore in FY23 to Rs 5,747 crore in FY24 to generate this revenue. This indicates a significant increase in the company’s spending to earn its revenue.

Under the leadership of Aadit Palicha, Zepto saw a rise in its information technology and advertising expenses. These expenses rose to Rs 116 crore and Rs 303 crore, marking an increase of 65.7 per cent and 40.3 per cent, respectively.

The company also incurred substantial costs in warehousing and delivery, amounting to Rs 493 crore and Rs 580 crore, respectively. In terms of earnings, the sale of products constituted over 89 per cent of the total operating revenue. The remaining income was generated from delivery, warehousing, and advertising services. Additionally, Zepto earned Rs 44 crore from non-operating income.

The company’s current assets for FY24 stood at Rs 1,398 crore. Recently, Zepto secured $350 million in a funding round led by Motilal Oswal Private Wealth, raising the company’s valuation to $5 billion.However, the company has been under scrutiny for its work culture. Last week, Palicha stated that he is not against work-life balance and even recommends it to his competitors. This statement was in response to a viral post on Reddit accusing the quick e-commerce platform of fostering a toxic work culture.

The anonymous user alleged that Zepto’s working environment was toxic, with employees working exhausting 14-hour shifts and being pressured with demanding expectations. In the quick commerce sector, despite Swiggy’s Instamart inventing the category, Zomato’s Blinkit has taken an early lead, and Zepto continues to execute well.In related news, Uniqlo India is targeting Rs 1,000 crore in sales for the current fiscal year, maintaining its 30 percent annual growth trajectory, supported by retail expansion. The company is also increasing local sourcing, aiming to raise it from 15.5 percent currently to 18 percent by 2025. India remains an “important” market for Fast Retailing Co., Uniqlo’s parent company, which recently reported annual sales of 3 trillion yen (approximately USD 20 billion) and aims to triple this figure to 10 trillion yen in the future.

In another development, Swiggy’s shares debuted 7.7% higher in pre-open trade on November 13, following the oversubscription of its $1.4 billion initial public offering (IPO) by more than three times last week. The stock listed at Rs 420 on the National Stock Exchange, compared to its issue price of Rs 390. Swiggy’s founders and top management were allocated ESOPs worth nearly Rs 2,600 crore in its latest stock ownership plan.