• Swiggy, the food delivery giant, reported a misappropriation of over Rs 33 crore by a former junior employee.
• Despite the setback, Swiggy is proceeding with its IPO plans, aiming to raise up to Rs 3,750 crore.
• Swiggy's revenue grew by 36% to Rs 11,247 crore in FY24, but it still trails behind competitor Zomato.

In a startling disclosure, Swiggy, the food delivery behemoth, has reported a significant misappropriation of funds by a former junior employee. The company, which is on the brink of its Initial Public Offering (IPO), revealed that the employee allegedly pilfered more than Rs 33 crore from one of its subsidiaries over an unspecified period. This incident has sparked serious concerns about the company's corporate governance and internal control mechanisms.

The misappropriation was unearthed during the current financial year and was highlighted in the company's annual report for the fiscal year 2023-24. The report stated, "The Group, during the current year, identified embezzlement of funds in one of the subsidiaries by a former junior employee amounting to INR 326.76 Mn over the past periods." The identity of the individual implicated in the fraud has been kept confidential in the report.

Upon detecting the fraud, Swiggy took immediate action by launching an investigation with an external team. The company has also lodged a legal complaint against the individual involved. The report further added, "Based on the review of the facts discovered during the investigation, the Group has recorded an expense for the aforementioned amount during the year ended March 31, 2024."

Swiggy's IPO Plans Amidst the Crisis

Despite this setback, Swiggy has shown resilience and is proceeding with its IPO plans. The company confidentially filed its IPO draft documents in April and aims to raise up to Rs 3,750 crore (approximately $450 million) through a new issuance. Additionally, it plans to raise up to Rs 6,664 crore (about $800 million) via an offer-for-sale in its $1.25 billion IPO.

Swiggy's financial performance in the last fiscal year (FY24) presents a mixed picture. On one hand, the company posted a net loss of Rs 2,350 crore. However, this represents a significant improvement, with the net loss reduced by 44 per cent from Rs 4,179 crore in FY23. On the other hand, the company's revenue grew by 36 per cent to Rs 11,247 crore in FY24, up from Rs 8,265 crore in the previous year.

The company's gross order value (GOV) stood at $4.2 billion, up 26 per cent year-on-year, with around 14.3 million monthly transacting users. Despite these improvements, Swiggy still trails behind its competitor Zomato, which held a 57 per cent market share in the food delivery sector, compared to Swiggy's 43 per cent.

Swiggy's Financial Performance and Market Position

According to the company's FY24 financial report, profitability has sharply improved year-on-year. The report stated, as the peak of investments in Instamart is behind us and the business continues to grow rapidly. This suggests that Swiggy's strategic investments are starting to bear fruit, and the company is on a path of rapid growth.

This incident is not new for companies ahead of IPO issue or a major shift. For instance, in 2018, Punjab National Bank, one of the largest public sector banks in India, reported a fraud of nearly $2 billion. The fraud was perpetrated by Nirav Modi, a high-profile jeweller, and his associates, who allegedly colluded with bank officials to issue fraudulent Letters of Undertaking.