Firm has reached out to at least three of its peers in India as it revisits its strategy in the crowded sector
New Delhi: Online food ordering company Foodpanda Group may be looking to sell its Indian arm as the Rocket Internet-backed firm revisits its strategy in the country amid intense competition in the food-tech sector, according to two people familiar with the development.
The Germany-based company has reached out to at least three of its peers in India, said the two people who did not wish to be quoted.
“The talks started sometime in August and are in very early stages," said one of the two people mentioned above. Both spoke on condition of anonymity.
The process is being spearheaded by the company’s senior executives in Germany, including co-founder and group chief executive Ralf Wenzel.
Wenzel denied that Foodpanda Group is looking to sell its Indian business.
“I can confirm that we are not planning or intending to sell Foodpanda India and there are no discussions regarding that matter. We are very happy with Foodpanda’s developments in India and will keep on investing into India as one of our core markets," he said.
Gurgaon-based Foodpanda India, which is battling several issues related to fraud and systemic failure and coping with churn in senior positions is yet to establish itself in any significant way in the Indian market despite being among the early movers in the space.
Foodpanda also acquired food delivery business TastyKhana in November 2014 and Just Eat India in February.
In August Foodpanda’s founder Rohit Chadda stepped down. Managing director Vijayendra Singh quit the firm in January.
The company is facing stiff competition from TinyOwl (TinyOwl Technology Pvt. Ltd), Swiggy (Bundl Technologies Pvt. Ltd) and Zomato Media Pvt. Ltd, which has recently entered the online food-ordering space.
Food technology start-ups have attracted ample investor interest. According to Tracxn, a company which provides data on start-ups, about ₹ 467 crore has been invested in the sector in 2015, with Zomato alone receiving ₹ 320 crore.
Separately, other companies in India funded by Rocket Internet are also struggling to expand their business and many are witnessing a churn in their top management.
In September, Mint reported that Rocket Internet, together with Kinnevik, is looking to sell online fashion retailer Jabong, which has been struggling to grow its business and is losing market share to competitors such as Myntra and the fashion business of Amazon and Flipkart.
Rocket-backed online furniture company FabFurnish (Alix Retail Pvt. Ltd) too is in turmoil with competitors such as Pepperfry (run by Trendsutra Platform Services Pvt. Ltd) and Urban Ladder (Urban Ladder Home Décor Solutions Pvt. Ltd) receiving large cheques from investors such as Goldman Sachs and Sequoia Capital.
In July, FabFurnish founders Mehul Agrawal and Vikram Chopra quit the company to start their own venture.
Rocket Internet AG, an e-commerce-focused venture capital firm and start-up incubator, is known for creating clones of well known Internet businesses and then selling them out once business gains scale.
India has not played out according to Rocket’s expectations.
Foodpanda Group, which currently operates in about 39 countries across five continents, launched its business in India in May 2012. Together with TastyKhana and Just Eat, the brand is present in more than 200 cities and partners over 12,000 restaurants.
Between March and May, Foodpanda Group raised over $200 million from Goldman Sachs and Rocket Internet. A large chunk of the $100 million pumped in by Goldman was expected to come into India, Mint reported in May.