Synopsis : Eternal, the parent company of Zomato and Blinkit, plans to cap foreign ownership at 49.5% to qualify as an Indian-Owned-and-Controlled Company (IOCC). The move will unlock inventory-led margin benefits and operational flexibility for Blinkit.
In a strategic move aimed at enhancing its quick commerce capabilities, Eternal, the parent company of Zomato and Blinkit, has announced its board’s approval to cap foreign ownership at 49.5%. This decision is intended to help the company qualify as an Indian-Owned-and-Controlled Company (IOCC) under Indian foreign exchange regulations—a status that would grant greater operational flexibility and improved margins.
Eternal’s regulatory filing revealed that as of March 31, the company’s domestic ownership stood at 55%, thereby meeting the threshold for IOCC classification. The company noted that the IOCC status is critical for Blinkit, as it allows inventory ownership, which is otherwise restricted under India’s FDI rules for foreign-funded e-commerce platforms.
Blinkit can now unlock margin improvements, especially in unbranded, fragmented, and established FMCG categories,” Eternal said. It also plans to launch private labels across diverse segments including home décor, gourmet foods, toys, pooja items, and seasonal merchandise—using its balance sheet for working capital support and inventory ownership.
This proposal is still subject to shareholder approval, but signals Eternal’s ambition to go deeper into inventory-led commerce, giving it an edge over pure-play marketplace models.
The decision follows Eternal’s ₹8,500 crore QIP round in November 2024, which significantly raised domestic mutual fund holdings. This capital raise was key in bumping up the Indian shareholding needed to meet IOCC norms. Meanwhile, Blinkit’s top rival Zepto is also bolstering domestic shareholding with significant funding from Indian HNIs and institutions.
India’s FDI rules prohibit foreign-owned platforms from controlling inventory or sellers, prompting companies like Blinkit to rely on dark store networks managed by third parties. With IOCC status, however, Blinkit can now own and operate these stores directly, enhancing cost efficiency and inventory control.
Eternal emphasized that other companies like FirstCry have implemented similar foreign ownership caps to reap the benefits of IOCC. The shift is expected to accelerate Blinkit’s category expansion and boost overall profitability.
On the market front, Eternal’s stock closed 4.4% higher at ₹231.75 on April 17, ahead of the Good Friday holiday. For the December 2024 quarter, Blinkit reported a 120% YoY surge in gross order value to ₹7,798 crore, driven by rapid dark store expansion—now at 1,000, with plans to double that by year-end.
Disclaimer : This article is for informational purposes only and should not be considered financial or investment advice. Readers are advised to consult professional advisors before making any investment decisions.
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