Swiggy Caps Foreign Ownership at 49.5% to Qualify as Indian-Owned Company
Indian food delivery company Swiggy's board has approved a proposal to cap aggregate foreign ownership at 49.5%. The move aims to achieve status as an Indian-Owned and Controlled Company (IOCC).
Food delivery platform Swiggy has moved to solidify its status as an Indian-Owned and Controlled Company (IOCC) after its board approved a proposal to cap aggregate foreign ownership at 49.5%. The company is now seeking shareholder approval for this significant change.
If approved by shareholders, Swiggy will meet the criteria for IOCC status under India's Foreign Exchange Management Act (FEMA). This development follows a recent reduction in its foreign ownership, which stood at 49.76% earlier this month. The company's board also approved amending its Articles of Association (AoA) to align governance with IOCC requirements.
This strategic shift is expected to allow Swiggy to transition its quick-commerce arm, Instamart, from its current marketplace model to an inventory-led model. Under the new structure, Instamart would procure products directly from brands and sell them on its platform. This move mirrors similar successful transitions by competitors like Blinkit, and is anticipated to significantly improve Instamart's profit margins and reduce net cash burn.
The company's pursuit of IOCC status is a long-term objective. It faced a setback earlier this year when a similar proposal to amend its AoA failed to secure the required 75% shareholder vote. Swiggy has stated it is working constructively with shareholders to address concerns and achieve a positive outcome, emphasizing that becoming an IOCC aligns with comparable Indian companies and is expected to create long-term shareholder value.