Swiggy acquires Ramco-backed LYNK to enter food and grocery retail market

Swiggy, which offers on-demand food and grocery delivery, has entered into a definitive agreement to acquire retail distribution platform LYNK Logistics Limited. The acquisition will help Swiggy enter India’s $570 billion food and grocery retail market.  

LYNK works with leading FMCG brands as an authorised distributor, connecting them to retail stores. The acquisition not only brings a profitable business unit into Swiggy’s portfolio but also promises potential synergies with its quick delivery service Instamart.  

“Investing in supply chain and technology is a big driver for improving the unit economics in the grocery delivery business which is highly fragmented and there are no signs of any large companies making break-even or profits. It is an emerging business. To drive margins in this business, one needs to ensure higher orders or higher throughput per store which could be a function led by lower lead time. Better packaging and faster processing of the orders would also help drive higher throughput,” Karan Taurani, Senior VP, Elara Capital, said.  

Backed by Ramco Industries, one of the holding companies of Ramco Cement and Ramco Systems, LYNK claims to have grown 2.5 times year-on-year with improved profitability.

Leveraging its proprietary technology stack, LYNK offers faster order to delivery turnaround and improved on-the-shelf availability through better fill rates to retail stores, the company said.

Owned and operated by LYNK Logistics Limited, the Chennai-based company is one of the largest tech-enabled FMCG retail distribution companies in the country. It enables FMCG brands to grow their retail presence through its network of 100,000+ retail stores across the top 8 cities of India. LYNK leverages its proprietary technology platform to power the retail distribution value chain across warehousing, inventory management and logistics operations.

Dutch-listed tech investor Prosus, the largest stakeholder in Swiggy, recently said the food delivery company experienced a significant increase in losses during the financial year (FY) 2023. Prosus, in its annual report, said its share of loss in Swiggy rose to $180 million in FY23, up from $100 million in FY22. This increase was attributed to investments in Instamart, which 'peaked' in the year. Swiggy's losses for the entire FY23 amounted to approximately $545 million, representing an 80 per cent increase compared to around $300 million in FY22.

Swiggy’s increased losses occurred at a time when its Founder and CEO Sriharsha Majety announced that the company’s core business, food delivery, turned profitable in March 2023, excluding ESOP costs and was on a path to profitability.

"Swiggy has become one of the very few global food delivery platforms to achieve profitability in less than nine years since its inception," Majety said back in March.

According to Prosus’ filings, Swiggy's gross merchandise value (GMV) only grew to $2.6 billion in FY23, up from $2.3 billion in FY22, representing a modest increase of approximately 13 per cent.

Founded in 2015 by Abinav Raja and Shekhar Bhende, LYNK will continue to operate as an independent business post the acquisition. The company said it will leverage Swiggy’s strength in technology and logistics to rapidly scale their existing platform.

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