Swiggy Faces Embezzlement Scandal Amid IPO Plans
Swiggy, a leading online food delivery service in India, has recently revealed a significant embezzlement case involving one of its former junior employees. According to the company’s annual report for the financial year 2024, the employee is accused of committing fraud totaling approximately Rs 33 crore over several years. This disclosure comes at a critical time as Swiggy prepares to launch its Initial Public Offering (IPO).
Details of the Embezzlement Case
The annual report, seen by Moneycontrol, discloses that the alleged fraud occurred within one of Swiggy’s subsidiaries. The report states, “During the current year, the group has detected embezzlement of about Rs 32.67 crore in one of its subsidiaries. This amount was embezzled by a former junior employee over the past years.” In response to this discovery, Swiggy has engaged an external team to investigate the matter thoroughly, and a legal complaint has already been filed against the former employee.
Financial Implications
As part of the audit findings, Swiggy has decided to account for the embezzled amount as an expense for the financial year ending March 31, 2024. This incident raises concerns regarding internal controls and risk management within the organization. However, despite this setback, Swiggy’s revenue saw significant growth, climbing 36% to reach Rs 11,247 crore in FY24, and its losses were reduced by 44%, down from Rs 4,179 crore to Rs 2,350 crore.
IPO Aspirations Despite Challenges
Swiggy has been eyeing a significant IPO, having submitted draft papers via a confidential route on April 26 this year. The company aims to raise around Rs 10,414 crore through this IPO, with Rs 3,750 crore generated through new shares and an Offer-for-Sale (OFS) of roughly Rs 6,664 crore. Despite its improving financial metrics, Swiggy still lags behind its primary competitor, Zomato. In FY24, Swiggy captured a 43% market share in the food delivery sector, while Zomato remains dominant with a market share of 57%.
Conclusion
The revelation of the embezzlement case is a significant blow to Swiggy, particularly as the company strives to enhance its reputation and attract investors ahead of its IPO. The unfolding investigation and the assumptions made in the company’s annual report will likely play a vital role in determining the trust of stakeholders as the firm moves forward.
