Eternal's Board Clears Plan To Cap Foreign Ownership At Under 50%

The board of food and grocery delivery company Eternal has decided to limit foreign ownership to 49.5%, according to a stock exchange filing. 

In its stock exchange filing, Eternal said that getting IOCC status would let it launch its own private label products in areas like home décor, gourmet foods, toys, pooja items, and seasonal goods. The company explained that by using its funds to support small brands or hold inventory, Blinkit can help grow these categories.

Eternal also mentioned that other Indian companies benefit from IOCC status by owning inventory for their online businesses. For example, FirstCry has already set a 49.5% limit on foreign ownership, similar to what Eternal is planning.

This move is meant to give its quick commerce arm, Blinkit, more freedom by letting it hold inventory instead of just running as a marketplace which is required under India’s foreign investment rules.

As of March 31, Eternal’s domestic ownership was 55%, making it an Indian-Owned-and-Controlled Company (IOCC) under Indian regulations.
This IOCC status will help Blinkit improve its profit margins, especially in unbranded or fragmented product categories and in FMCG segments where holding inventory helps boost earnings.

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Domestic shareholders also increased their stake in Eternal to 23.56% by the end of the last quarter, up from 20.54% in the previous one.

So, why is Eternal planning to limit foreign ownership? It could be because the government prefers quick commerce grocery companies to have more domestic ownership. This was hinted at by Commerce Minister Piyush Goyal during his speech at ‘Startup Mahakumbh’.

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