Following a distress trade sale to a special purpose vehicle in October last year, Singapore-based Zimplistic, the company that manufactures the fully-automated flatbread maker Rotimatic, is giving shape to a revival plan that will ride on balancing growth and financial sustainability.
Founders Pranoti Nagarkar Israni and Rishi Israni, who continue to operate the business, will shift their focus on pursuing viable economics rather than chasing after market share. The entrepreneur-duo is looking to build Rotimatic’s road to recovery on low-cost models, greater efficiencies and a higher degree of automation.
Light Ray Holdings, an investment vehicle owned by Helix Capital’s Madhujeet Chimni and Bharadwaj Chivukula, now owns 100% shares in Zimplistic.
Zimplistic’s comeback plan also includes entry into the Indian market, in a homecoming of sorts for the roti-making machine.
Speaking to DealStreetAsia on Rotimatic’s proposed official India foray, co-founder Pranoti Israni said, “it’s definitely something we’re looking at and working on. We are examining price points and user behaviour of the market.”
Declining to divulge further details including a timeline for the launch, she said, the company was looking at all operational aspects including production, logistics and after-sales support as it explores the new market launch.
While about 2,000 Rotimatic machines can be found in Indian homes, the brand was never officially launched in the country.
The company was servicing over 60,000 homes, with 70% of them in the US, Canada, UK and Australia. Based on data from the WiFi-connected machines, the Rotimatic, priced at $1,299, has already delivered over 111 million flatbreads.
Founders Pranoti and Rishi Israni unveiled the idea of the world’s first fully-automated roti or Indian flatbread maker Rotimatic in 2008. It took the startup eight years of development and 15 iterations of their prototype before they hit the market.
The startup finally shipped out the product to its first batch of customers in 2016, on the way to fulfilling 8,000 pre-orders that were lodged in 2014. The company had collected more than $5 million within a week of opening pre-order sales for the machine in 2014. At that time, the global waiting list for the product was 350,000.
Being a first-mover in the flatbread-making space, Zimplistic was focused on capturing a sizeable market share before COVID-19 struck and derailed its operations.
By February last year, Zimplistic founders said, the company had suffered a significant impact on account of supply chain disruptions in China.
“If the component doesn’t get made in time, [supply is affected] and logistics was hit [as well],” said the founder-duo from the Zimplistic office at Science Park Drive.
When a few of their suppliers went out of business, they had to find alternative options. “If you decide to change a component, you are looking at [a lag of] three to six months. For some electronic components, it could be even longer,” they explained.
Furthermore, their contract manufacturing facility in Malaysia had shut down, resulting in further delays and disruption.
Picking from the experiences, Pranoti Israni said, “we are working on building that readiness to quickly find alternative sources or components, rebuilding relationships with suppliers and getting to know their challenges early on to be prepared for red flags if any.”
She added, “we are doing a complete deep dive on that whole customer service piece” and “using technology to do a lot of auto troubleshooting so that a user doesn’t have to depend on anyone”.
While the impact of the COVID-19 outbreak dealt a severe blow on the startup, Zimplistic was already accumulating losses and burning cash.
Zimplistic posted accumulated losses of $49 million and clocked revenues of $13.8 million in 2019. In the year, it recorded a loss after tax from continuing operations of $10.4 million, according to the company’s regulatory filings in Singapore, compared to corresponding figures of $9.79 million in 2017 and $23.6 million in 2018.
The same filings from ACRA also revealed that net cash used in operating activities in 2019 was -$9.9 million, compared to corresponding figures of -$3.4 million in 2017 and -$19.9 million in 2018.
Zimplistic raised a total of $48.5 million in four rounds of funding. Its Series C round was led by Credence Partners and EDBI in 2018. Its other investors include Openspace Ventures, Robert Bosch Venture Capital, VIR Private Investors and Distinguished Gentleman Group.
An investor had previously told DealStreetAsia that previous backers had taken significant haircuts on the distress sale of the company to Light Ray Holdings in October last year.
According to financial filings, Light Ray Holdings acquired about 7 million shares of Zimplistic. The amount of paid-up share capital or amount agreed to be considered as paid is about $53 million. They declined to confirm the amount they have paid for the shares.
Speaking about the acquisition, Light Ray’s Madhujeet Chimni told DealStreetAsia, “[we found it to be a mix of] good product, good team, good market potential and great founders.”
“[Zimplistic] is probably the first tech product company that we have invested in. We saw the market and the need is huge. It’s just a phenomenal product. It solves a unique problem,” he said.
Chimni said they do not play any operational role in the company. “Nothing changes, other than the fact that the company is starting to look to hire more people, strengthen the teams and the spending is getting more targeted towards certain functions such as customer service,” he added.
Chimni is also a founder of tech consulting firm Stone Apple (acquired by Hitachi Consulting in 2014); corporate services provider In.Corp through the merger of four companies; and Singapore-based waste management startup Blue Planet.