The board of food and grocery delivery company Eternal has approved a proposal to cap foreign ownership in the firm at 49.5 percent, it said in a notice to the exchanges. The move is aimed at providing "greater operational flexibility" to its quick commerce unit, Blinkit, by allowing it to hold inventory -- rather than operate solely as a marketplace, as required under India’s foreign investment rules.
As of March 31, Eternal’s domestic ownership stood at 55 percent, the company said in a regulatory filing. "As a result, the company now qualifies as an Indian-owned-and-controlled company (IOCC) under applicable Indian foreign exchange regulations."
It said that the IOCC status will enable Blinkit to improve its margins -- particularly in fragmented or unbranded categories, as well as in established FMCG segments, where owning inventory allows for better margins.
The proposal is subject to shareholders’ approval.
In November 2024, Eternal (then Zomato Ltd) had raised Rs 8,500 crore through a qualified institutional placement (QIP) primarily from domestic mutual funds -- a move that bumped up the proportion of Indian shareholding in the company.
Blinkit’s rival, Zepto, is also working to increase its domestic shareholding. In November, the company raised $350 million from Indian high-net-worth individuals (HNIs), family offices, and major financial institutions. It is currently in talks to raise an additional $250 million, which could further boost its domestic ownership.
Under India’s foreign direct investment (FDI) rules, foreign-funded online marketplaces are not allowed to own inventory or control sellers on their platforms. Due to these restrictions, quick commerce platforms typically do not directly own the dark stores – micro-warehouses used for 10-minute deliveries – which are instead operated by separate entities.
In its exchange filing, Eternal stated that attaining the IOCC status would enable it to launch private labels across categories such as home décor, gourmet foods, toys, pooja items, and seasonal merchandise. “By offering working capital support directly to small brands and manufacturers, and/or using our balance sheet to own inventory, Blinkit can help drive growth across many such product categories,” the company said.
Eternal also noted that several Indian companies benefit from the IOCC status by owning inventory in their online commerce operations. “For instance, FirstCry – a professionally managed, listed company – has already implemented a cap on aggregate foreign ownership at 49.5 percent, similar to what we are proposing,” it added.
On April 17, Eternal’s stock closed 4.4 percent higher at Rs 231.75 on the BSE. Markets were closed on April 18 on account of Good Friday.
For the quarter ended December 2024, Blinkit reported a gross order value (GOV) of Rs 7,798 crore, marking a 120 percent year-on-year (YoY) increase. The company accelerated its dark store expansion during the quarter, reaching 1,000 stores ahead of its March target. Blinkit has also announced plans to scale up to 2,000 dark stores by the end of this calendar year.
As of March 31, Eternal’s domestic ownership stood at 55 percent, the company said in a regulatory filing. "As a result, the company now qualifies as an Indian-owned-and-controlled company (IOCC) under applicable Indian foreign exchange regulations."
It said that the IOCC status will enable Blinkit to improve its margins -- particularly in fragmented or unbranded categories, as well as in established FMCG segments, where owning inventory allows for better margins.
The proposal is subject to shareholders’ approval.
In November 2024, Eternal (then Zomato Ltd) had raised Rs 8,500 crore through a qualified institutional placement (QIP) primarily from domestic mutual funds -- a move that bumped up the proportion of Indian shareholding in the company.
Blinkit’s rival, Zepto, is also working to increase its domestic shareholding. In November, the company raised $350 million from Indian high-net-worth individuals (HNIs), family offices, and major financial institutions. It is currently in talks to raise an additional $250 million, which could further boost its domestic ownership.
Under India’s foreign direct investment (FDI) rules, foreign-funded online marketplaces are not allowed to own inventory or control sellers on their platforms. Due to these restrictions, quick commerce platforms typically do not directly own the dark stores – micro-warehouses used for 10-minute deliveries – which are instead operated by separate entities.
In its exchange filing, Eternal stated that attaining the IOCC status would enable it to launch private labels across categories such as home décor, gourmet foods, toys, pooja items, and seasonal merchandise. “By offering working capital support directly to small brands and manufacturers, and/or using our balance sheet to own inventory, Blinkit can help drive growth across many such product categories,” the company said.
Eternal also noted that several Indian companies benefit from the IOCC status by owning inventory in their online commerce operations. “For instance, FirstCry – a professionally managed, listed company – has already implemented a cap on aggregate foreign ownership at 49.5 percent, similar to what we are proposing,” it added.
On April 17, Eternal’s stock closed 4.4 percent higher at Rs 231.75 on the BSE. Markets were closed on April 18 on account of Good Friday.
For the quarter ended December 2024, Blinkit reported a gross order value (GOV) of Rs 7,798 crore, marking a 120 percent year-on-year (YoY) increase. The company accelerated its dark store expansion during the quarter, reaching 1,000 stores ahead of its March target. Blinkit has also announced plans to scale up to 2,000 dark stores by the end of this calendar year.
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