Swiggy to Infuse ₹1,600 Crore into Scootsy through Rights Issue

Swiggy's subsidiary, Scootsy, will receive an infusion of up to ₹1,600 crore in multiple tranches through a rights issue, as disclosed in Swiggy's quarterly report on December 3. Of this amount, ₹1,350 crore is earmarked for expanding Instamart, while ₹250 crore will be allocated as working capital. This investment aligns with Swiggy's IPO prospectus and will fund Scootsy’s dark store network expansion and associated lease or license payments.

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Swiggy is subscribing to Scootsy’s rights issue at ₹7,640 per share, with no changes to the shareholding pattern. Scootsy operates in supply chain services, providing warehouse management, order fulfillment, and shipping solutions. Its revenue has grown from ₹1,580.3 crore in FY22 to ₹5,795.7 crore in FY24, though the company incurred a ₹423.97 crore loss during FY24. Supply chain and distribution contribute 40% to Swiggy's revenue, second to food delivery.

Quick Commerce and Strategic Moves

Swiggy also announced plans to diversify into sports team management, event organization, and acquiring broadcasting and sponsorship rights through a new subsidiary. Concurrently, Swiggy is evaluating strategies to improve Instamart’s profitability. CFO Rahul Bothra highlighted that increasing delivery fees for Instamart orders is under consideration, as the business currently subsidizes fees to onboard users. He also noted that advertising monetization is another avenue to enhance margins.

“In the overall delivery fee construct, today there is a certain amount of subsidy that goes into the business, both through the subscription programme (Swiggy One) as well as getting users acquainted (with) this new service. Over time there is expectation to increase the delivery fee,” Bothra told analysts after announcing the company’s quarterly results. He, however, did not provide any specific timelines for when the change is coming.

Delivery is free for Swiggy One (loyalty program) subscribers, while non-members are charged a dynamic delivery fee. In contrast, Blinkit, owned by Zomato, charges a delivery fee on every order and does not offer a loyalty program. Zepto, another significant player, provides free delivery to users of its Zepto Pass (loyalty program) but charges a delivery fee for non-subscribers, following a model similar to Swiggy Instamart's approach.

Rahul Bothra addressed questions about Swiggy's strategy to increase take rates (commissions) for its Instamart business from the current 15% to 20-22% in the future. He explained that one key approach is monetization through advertising on the platform, which is expected to enhance margins over time.

Revenue and Profitability

At the company level, Swiggy’s revenue grew 30% year-on-year to ₹3,601.5 crore in Q2FY25, with losses narrowing from ₹657 crore to ₹625.5 crore. Bothra also addressed plans to increase Instamart’s take rates from 15% to 20-22%.

Instamart recorded adjusted revenue of ₹513 crore in Q2FY25, more than doubling from ₹240 crore in Q2FY24, though still trailing competitor Blinkit's ₹1,156 crore for the same period.

To drive profitability, Swiggy has been consistently raising platform fees on food delivery orders. Introduced at ₹2 per order in April 2023, the platform fee has now reached ₹10 per order, following successful testing. Rival Zomato has adopted a similar strategy, maintaining a ₹10 fee even after the festive season.

These measures reflect the rising competition in quick commerce, where companies like Blinkit and Zepto are focusing on improving average order values (AOVs) and achieving profitability faster.