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Ola acquires Foodpanda India for $200 mn, Pranay Jivrajka to head

Ola acquires Foodpanda India for $200 mn, Pranay Jivrajka to head

Seven months after Uber launched its on-demand food delivery app UberEATs in India, Ola on Tuesday announced that it will acquire Foodpanda's India business.

Earlier past year, Ola shut down its Ola Café after it faced tough competition from food delivery majors - Swiggy, Tinyowl and Zomato.

Ola has also committed to make a fresh infusion of $200 million into Foodpanda India to expand its business, it said in a statement. Today, commission rates to restaurant partners have stabilised at 18-20 per cent; customers are willing to pay extra for delivery during monsoons and peak time because they get access to varieties of food with on-time delivery.

Delivery Hero, which floated on the stock exchange in Germany in June, had acquired food delivery firm foodpanda and its Indian subsidiary in December 2016. With Delivery Hero's global leadership and Ola's platform capabilities with unique local insights, this partnership is born out of strength. However, on the other end, Ola's biggest rival in the country, Uber is making consistent progress through its unit UberEATS, which now active in 27 countries including 7 Indian cities.

The food delivery business India is of mixed results. But the company shut down its operation in 2016, less than a year after operating in a handful of tier-one cities. But, on the other, the investment flow that peaked in 2015 with over $500 million has slowed down significantly to mere $80 million previous year. As one of India's pioneers in the food delivery space, Foodpanda has come to be a very efficient and profit focused business over the last couple of years.

Foodpanda's business is facing intense competition from Swiggy, which is backed by Naspers, Zomato, UberEats and Google Aero.

At the end of 2015, Foodpanda ran into operational issues, which included fake listings and unreliable deliveries, and laid off 300 staff.

"Food delivery has proved to be an expensive proposition for startups, which are losing money on every delivery fulfilled", wrote Sayan Chakraborty in his Mint article.

Ola, which began as ride hauling service Ola Cabs, started efforts to broaden its range of services in recent years with Ola Money, Ola Play and the ill-fated Ola Cafe and Ola Store. Additionally, Ola will benefit by becoming a key player in the food delivery segment. Ltd from its German parent Delivery Hero AG.

According to Jefferies, Zomato is now processing 2.5 million orders per month in India, while Swiggy, the market leader, is clocking 3 million to 4 million orders a month.

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