Food delivery company Zomato does not plan on foraying into the lending and credit business anymore, according to an exchange filing by the company.
Zomato’s finance arm, Zomato Financial Services Limited, said Tuesday it was voluntarily withdrawing its application with the Reserve Bank of India to get a certificate of registration to undertake the business of a Non-Banking Financial Company (Type II NBFC-ND).
“There is no material impact on the revenue/operations of the company,” it said in a statement.
Shares of the company closed 2.23% higher on NSE at Rs 208.52 apiece.
In January 2022, the company announced its plans to expand in the lending and credit business with the incorporation of a subsidiary to carry out its planned NBFC business. The unit was set up with a paid-up capital of Rs 3 crore and an authorized capital of Rs 10 crore. A month later, the unit was incorporated as Zomato Financial Services Limited.
These developments come after reports of Zomato engaging in discussions with various NBFCs to create a provision of working capital loans to its affiliate restaurants and delivery partners.
Zomato’s other unit, Zomato Payments Private Limited, also voluntarily surrendered its certificate of authorization to operate as an online payment aggregator earlier in May. It had submitted an application with the RBI in November 2021 to operate as an issuer of prepaid payment instruments.
It had cited a lack of “significant competitive advantage against the incumbents in the payments space” and that it did not “foresee a business in payments space as commercially viable” as the reason behind its withdrawal.
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Employee Stock Option Plan approval
The company in a separate exchange filing also announced it has managed to scrape by majority approval for its ESOP expansion plan after nearly a fourth of investors voted against the motion.
Zomato in its quarterly earnings statement had announced it will undertake an ESOP pool of 18.26 crore employee stock options—about 2% of its outstanding share capital on a fully diluted basis. At the closing price of Rs 208 apiece, its ESOP of 18.26 shares would be worth around 3,800 crore.
Just weeks before, the food delivery platform had announced it was in advanced discussions with Paytm for the latter’s events and ticketing business. These developments come as Zomato tries to revamp its stepping-out segment, while peers like Zepto are focused on quick commerce and Swiggy navigates choppy IPO waters.
Edited by Jyoti Narayan
