Uber Sells UberEats India To Zomato For $400 Million

In a move to lessen the drag on margins that its operations in India are incurring, Uber's last resort is to sell UberEats to competitor Zomato.

The ride-hailing company is now in advanced talks to sell off its food business to its Indian food delivery rival for $400 million, TechCrunch reports. The structure of the deal is similar to its Southeast Asia exit last year that surrendered its operations to Grab, where Uber got a stake in the Singapore-based company. UberEats will receive a sizeable stake in Zomato if the deal pushes through.

However, there's no confirmation of the deal just yet as both Uber and Zomato declined to comment.

Uber has been pushing for the same kind of deals as the never-been-profitable company is looking for ways to stop it from hemorrhaging cash. In 2016, Uber succumbed to ride-hailing rival in China, Didi Chuxing. Uber sold its business and acquired an 18% stake in Didi. Last month, another loss trimming measure forced Uber to close down its South Korean operations.

Possibly part of why the American company entered a deal with Zomato is because of the competition that places itself at the third spot with only 250,000 to 300,000 orders processed per day -- a far cry from Zomato and Swiggy's more than 2 million a day, per The Times of India. UberEats in India had never seen orders past 600,000.

Globally, Uber is just notoriously unprofitable with losses of at least a billion dollars every quarter. The most recent quarter it racked up $1.1 billion in losses.

But that's not to say that the company acquiring UberEats in India is making money for its investors. Zomato is also unprofitable at a rate of $40 million in losses each month but was able to trim it down to $20 million, according to one of its investors, Info Edge.

Collectively, the food delivery business is a tightly competitive industry, with new entrants popping up every now and then. Uber's strategy is to consolidate and reduce its losses while maintaining exposure in the market. As the company eyes profitability in 2021, that would mean another year of losses for its investors.