 "LocalBanya's 'renovation' leads to sell-off buzz")
The announcement on Mumbai-based LocalBanya's website that it is 'under renovation' has led to the speculation that the grocery retail start-up might be up for sale. According to venture capitalists (VCs) and investment bankers, the three-year-old firm might have to down shutters for lack of funds.
"The founders lost control to investors rather early. Instead of operations, the focus was on marketing," says the chief executive of a VC firm that LocalBanya had approached while trying to raise funds. The VC had not participated then.
"We are under renovation. We will be back shortly. We know you love us. We love you too. So we decided to renovate to give you a better and more exciting experience," reads an announcement on the website, apparently down for maintenance and upgrade of its back-end. It is learnt that the firm had been low on funds. It recently raised an undisclosed sum, which did not last long.
According to data from the registrar of companies (RoC), LocalBanya had posted an accumulated loss of Rs 1 crore in 2013-14, against an accumulated loss of about Rs 36 lakh a year ago. It has not yet filed its financial details for 2014-15 with RoC. The records show the firm, which does not have any listed subsidiaries, had lent Rs 9.8 crore in 2013-14 to 'related parties'.
Approached for its comments, LocalBanya had not responded to an e-mail from Business Standard till the time of going to press. It has been in the midst of a human resource upheaval; there had earlier been reports that the firm had not been able to pay its employees' salaries for a few months. Rashi Choudhary, a co-founder, also resigned as director recently.
Other industry players say LocalBanya, despite having the first-mover advantage, lost out to competition as it was not able to raise funds at the pace Big Basket or Grofers did. "It is a business where the burn rate is high; if investors do not have patience, things can get messy. They (LocalBanya) might have expanded to more geographies than they could handle," says the CEO of another VC firm that holds a large stake in a company valued at over $1 billion.
Investors say LocalBanya has evinced interest in being acquired by a big retail brand for a stock plus cash option. Springboard Fund, owned by Bennett Coleman and Co, is said to be the largest investor in LocalBanya.
