Bizongo, a B2B ecommerce and supply chain platform, has reported a strong growth in its revenue for the fiscal year 2023, but also incurred a steep increase in its losses. The company, which offers digital services to SMEs in various sectors such as packaging, apparel, and metal, has also launched a new product called ‘cloud factory’, which leverages IoT devices to enable made-to-order goods.
Revenue nearly doubles, but so do expenses
According to the company’s consolidated financial statements with the Registrar of Companies, Bizongo’s revenue from operations grew 98.6% to Rs 166.86 crore in FY23, compared to Rs 84 crore in FY22. The company made 96% of its revenue via service fees, while the rest came from design income and platform fees. It also earned around Rs 18.15 crore from interest and gains on financial assets, taking its total revenue to Rs 185 crore.
However, the revenue growth came at a cost, as the company’s expenses also soared 97.1% to Rs 476.6 crore in FY23, from Rs 241.8 crore in FY22. The major expense items were finance costs, which accounted for 32% of the total expenses, employee benefit costs, which comprised 24%, and allowance for expected credit loss, which amounted to 26%. The finance costs, which include interest on bill discounting, working capital loans, and debentures, jumped 3.9 times to Rs 151.95 crore in FY23. The employee benefit costs, which also include ESOP expenses worth Rs 27.12 crore, rose 79.4% to Rs 113.23 crore. The allowance for expected credit loss, which reflects the risk of default by the borrowers, was Rs 124 crore.
As a result of the high expenses, the company’s losses widened 173.1% to Rs 291.57 crore in FY23, from Rs 106.76 crore in FY22. The company’s operating cash outflows also improved by 29.6% to Rs 646.3 crore during the last fiscal year. The EBITDA margin and ROCE of the company stood at -73.06% and -27.60%, respectively, during the year. On a unit level, Bizongo spent Rs 2.86 to earn a rupee of operating revenue in FY23.
Bizongo diversifies its offerings and customer base
Bizongo, which was founded in 2015 by IIT graduates Sachin Agrawal, Aniket Deb, and Ankit Tomar, provides software-based vendor management, supply chain automation, and supply chain financing to its enterprise customers. The company serves 450-500 customers in sectors such as fashion and lifestyle, pharmaceuticals, consumer discretionary, and consumer staples. Bizongo also provides unsecured financing to vendors and claims to have tied up with more than 40 banks and NBFCs for loan disbursement.
Over the years, Bizongo has changed its focus on various segments of vendor digitisation, from packaging, textiles and apparel to contract manufacturing. Currently, the company derives half its revenue by consolidating raw material and purchasing workflows for SME vendors and the other half by providing unsecured financing to the same vendors.
In terms of raw material, Bizongo has evolved its focus from apparel and packaging to metal over the last two-and-a-half years. Currently, more than 50% of the raw materials bought by SME vendors on its platform are steel and aluminium. Paper and polymer command about 15% volume share each, with the rest coming from yarn and other raw materials.
“We have reduced our dependence on apparel as a sector quite a lot. It was becoming a sizeable portion. But we wanted to diversify and get into more core industries, so we entered new areas and expanded,” Agrawal told ET.
Close to 99% of the 200-300 customers the company acquired in the last two years belong to traditional industries, Agrawal said.
Bizongo launches ‘cloud factory’ and raises funds
Bizongo has also launched a new product called ‘cloud factory’, which is a network of IoT-enabled factories that can produce customised goods on demand. The company claims that this product can reduce inventory costs, lead times, and wastage for its customers, while also ensuring quality and compliance.
The company has also raised $110 million in a Series D round led by Tiger Global Management at a $600 million valuation. The funding round also saw participation from existing investors such as International Finance Corp, Chiratae Ventures, B Capital, and British International Investment.
The company plans to use the funds to extend its digital services to new domains such as apparel and textiles and expand its offerings into the Southeast Asian market. The company is also in advanced discussions on an acquisition, Agrawal said, without revealing any details. In 2022, Bizongo had acquired two companies: Hexa and Clean Slate Technologies.
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