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Uncertain days await Burrp as Network18 plans to sell food discovery platform

Uncertain days await Burrp as Network18 plans to sell food discovery platform

Author | Saif Ahmad Khan | Monday, Apr 24,2017 8:06 AM

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Uncertain days await Burrp as Network18 plans to sell food discovery platform

Mukesh Ambani-led Network18 is on the lookout for investors to sell or transfer Burrp, an online food platform owned by the group. However, at the time of filing of this report, no specific company’s name had emerged linking it to the acquisition of Burrp. When exchange4media asked Lodestar’s senior vice president Arun Sharma about the likely buyers for Burrp, he said, “Existing channels that don’t have an offering in web domain (could be interested).” Steering clear of any speculation owing to the dicey nature of valuations in the digital domain, Sharma added that media companies looking towards expanding their portfolio in the digital space might express keenness in buying Burrp.

Alok Bansal, co-founder & CFO at Policybazaar, noted that the valuation of a company was dependent on three factors, namely, scale, growth, and profitability. According to Bansal, an enterprise may sacrifice “profitability in the short-term” with an eye on future growth. “Eventually, a business has to make sense,” he said. It is important to mention that Network18’s decision to sell Burrp was fuelled due to what was described as “insignificant contribution (of Burrp) to the revenue” of the holding company.

As per an interview given by Burrp’s co-business head Pradeep Prabhu in January, Burrp generated Rs 6 crore in revenue with a target of increasing its top line to Rs 150 crore by March 2019. By doing so, the leadership predicted arriving at break-even point within three years. On April 19, however, Network18 informed that its board of directors had approved the restructuring of Burrp. The internet website which revolves around “food and restaurant recommendation” for consumers recently moved from an “online listing to a transaction-led” business model.

“The board has given in-principle approval to sell/transfer/otherwise dispose-off or transfer Burrp to any other entity including a related party/getting a strategic investor,” Network18 told the National Stock Exchange. Maheshwer Peri, chairman of Careers360, described the board’s action as “strange” reasoning that one doesn’t pass a resolution before selling a company but rather goes ahead to complete the deal. “I think they already have a buyer in mind. They just don’t want to disclose it,” Peri claimed, adding that it could be one of the group’s own company.

While Peri agreed that a company’s valuation “depends on many things” apart from revenue, Bansal was quick to point out that valuations were often influenced by the “terms and conditions of the deal”. He argued that one could fetch the desired amount if they are willing to provide the investors with the terms they want. Identifying the online food discovery market as a “very interesting space,” Peri opined that Burrp will fetch a buyer since they are the only player in the domain besides Zomato with the latter being far ahead of it.

Though Network18’s board approved certain “directors and officers” to work towards assessing the various options available before Burrp, the company refused to disclose their identities to exchange4media. Moreover, Network18 did not entertain various other queries which included a question about the costs incurred on Burrp’s staff of 180 professionals across six cities. Headquartered in Mumbai, the foundation of Burrp took place in 2006. Three years later, it was acquired by Infomedia18 at a reported price of Rs 4.25 crore.

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